Closing Costs in Ontario: What You'll Actually Pay Beyond the Purchase Price

Closing costs in Ontario are dominated by one line item: land transfer tax, calculated as a percentage of your purchase price on a rising scale. On top of that, expect legal fees, a home inspection, and title insurance, none of which show up in the listing price.

Ontario land transfer tax

Ontario charges provincial land transfer tax on every property purchase, calculated on marginal tiers of the purchase price:

• 0.5% on the first $55,000
• 1.0% on the portion from $55,000 to $250,000
• 1.5% on the portion from $250,000 to $400,000
• 2.0% on the portion from $400,000 to $2,000,000
• 2.5% on the portion above $2,000,000 (for one or two single-family residences)

It's marginal like income tax, so only the portion of the price in each bracket is taxed at that bracket's rate, not the whole purchase price at your top rate.

Toronto adds a second land transfer tax

If you're buying inside the City of Toronto, you pay a Municipal Land Transfer Tax on top of the provincial one, calculated on a similar tiered structure. Effectively, buying in Toronto proper roughly doubles your land transfer tax bill compared to an identical purchase just outside the city line, which is worth factoring in when you're comparing a Toronto listing against one in Vaughan or Mississauga.

First-time buyers get a rebate

Ontario offers a land transfer tax rebate for first-time homebuyers, and Toronto offers a separate municipal rebate on top of it for purchases within the city. Together they can eliminate land transfer tax entirely on a lower-priced first home. Eligibility rules and rebate caps are set by the province and the city respectively and are worth confirming with your lawyer at the time of purchase, since they're the kind of detail that gets updated.

The other costs to budget for

• Legal fees: your lawyer's fee for reviewing the agreement, conducting a title search, and handling closing.
• Home inspection: a pre-offer or conditional-period inspection of the property's condition.
• Title insurance: protects against title defects or fraud discovered after closing.
• Adjustments: prepaid property tax, utilities, or condo fees the seller has already covered get reimbursed to them at closing.

None of these are fixed amounts, they vary by property, lawyer, and inspector, so get actual quotes rather than budgeting off a rule of thumb.

FAQ

Is land transfer tax the same everywhere in Ontario?

No. Every Ontario purchase pays the provincial land transfer tax, but only purchases within the City of Toronto also pay Toronto's Municipal Land Transfer Tax on top of it.

Can first-time buyers avoid land transfer tax entirely?

On a lower-priced home, yes, in effect. Ontario's first-time buyer rebate (and Toronto's additional municipal rebate for city purchases) can offset the tax owing up to a capped amount, which fully covers it below a certain purchase price and reduces it above that.

Who calculates and collects land transfer tax?

Your real estate lawyer calculates the tax owing and includes it in your closing costs, then remits it as part of registering the transfer.