How Much Are Closing Costs in Canada? A Complete Breakdown for Buyers & Sellers

Purchasing or selling a home in Canada involves more than just the property's price tag. Closing costs, the additional fees and expenses incurred during the finalization of a real estate transaction, can majorly affect your budget. These costs typically range from 1.5% to 4% of the home's purchase price, depending on various factors such as location and property type.

Understanding these closing costs in Canada is important for both buyers and sellers to avoid unexpected financial surprises. In this comprehensive guide, we'll break down the common closing costs in Canada, providing clarity and helping you understand the complexities of the real estate process with confidence.

What Are Closing Costs?

When buying or selling a home in Canada, closing costs are the final round of expenses that come due before the property officially changes hands. These aren’t part of your mortgage or purchase price, they’re extra out-of-pocket costs that cover legal, administrative, and property-related fees.

For buyers, closing costs in Canada can include things like land transfer tax, legal fees, title insurance, home inspection fees, and mortgage-related charges. Sellers may face realtor commissions, legal fees, and adjustments for utilities or taxes.

These costs can add up quickly, often between 1.5% and 4% of the purchase price for buyers. That’s why it’s important to budget for them well in advance and understand exactly what to expect at the time of closing.

Who Pays Closing Costs in Canada?

Closing costs aren’t just a buyer’s responsibility: both parties have expenses to cover. The specific costs can vary depending on the type of property, the province, and the terms negotiated in the purchase agreement.

Do Buyers Pay Closing Costs in Canada?

Yes, buyers typically pay the majority of the closing costs. These often include:

• Land Transfer Tax (province-specific and sometimes municipal, e.g., in Toronto)

• Legal fees and disbursements

• Title insurance

• Property tax and utility adjustments

• Home inspection and appraisal fees

• Mortgage setup costs (e.g., lender fees, CMHC insurance if applicable)

These charges are usually due right before the deal closes, and they can add up to thousands of dollars on top of your down payment.

Do Sellers Have Closing Costs Too?

Sellers in Canada also face closing costs, they are just different from the buyer’s list. Common expenses include:

• Real estate agent commissions (usually 4–5% of the sale price)

• Legal fees

• Mortgage discharge or penalty fees (if breaking a term early)

• Adjustments for prepaid property taxes or utilities

In most cases, the seller’s largest cost is the commission owed to their agent and the buyer’s agent, which is taken from the proceeds of the sale.

Can Closing Costs Be Negotiated?

Sometimes, yes. In competitive markets, buyers may offer to cover more costs to win a bidding war. In slower markets, sellers might agree to cover part of the buyer’s closing costs to help close the deal faster. It really comes down to what’s agreed upon in the offer.

Typical Closing Costs for Buyers in Canada

If you're buying a home, especially in Ontario, it's important to budget beyond the down payment. Here's a detailed look at what you can expect to pay in closing costs as a buyer in Canada.

1. Land Transfer Tax (LTT)

This is one of the biggest closing expenses for buyers in Ontario. The LTT is calculated based on the purchase price of the home. In cities like Toronto, there's an additional municipal land transfer tax on top of the provincial amount.

Quick Tip: First-time buyers may qualify for a rebate (up to $4,000 in Ontario and an additional rebate in Toronto).

2. Legal Fees and Disbursements

Real estate lawyers typically charge between $800 and $2,000 for handling the purchase, depending on the complexity. This includes:

• Title search

• Reviewing the Agreement of Purchase and Sale

• Registering the deed and mortgage

• Coordinating with the lender and the seller’s lawyer

3. Title Insurance

Most lenders require title insurance. It's a one-time cost (roughly $250–$400) that protects against issues like title defects, zoning problems, or unpaid property taxes from previous owners.

4. Property Tax and Utility Adjustments

If the seller has prepaid property taxes or utilities, you’ll need to reimburse them for the portion that applies after the closing date. This is typically handled by your lawyer on closing.

5. Home Inspection and Appraisal Fees

While optional, a home inspection is highly recommended (costing $300–$500 on average). If you're getting a mortgage, your lender may also require a professional appraisal ($400–$700).

6. Mortgage-Related Costs

• Depending on your lender, these may include:

• Mortgage default insurance (if your down payment is under 20%)

• CMHC premium (which can be added to the mortgage, but provincial sales tax on it is paid at closing)

• Lender fees or broker charges

7. Moving and Other Miscellaneous Costs

Don’t forget about:

• Moving expenses

• Utility hook-ups

• Condo certificate (if buying a condo, ~$100)

• Property survey (if needed and not provided by the seller)

Closing Costs for Sellers in Canada

When selling a property, it’s easy to focus on the sale price and forget the costs involved in finalizing the deal. But sellers in Canada should budget for several closing expenses that can impact their final payout. Here’s what to expect:

Real Estate Agent Commission:

For most sellers, this is the largest closing expense. In Canada, real estate commissions typically range from 4% to 5% of the sale price, often split between the listing agent and the buyer’s agent. This fee is usually deducted directly from the sale proceeds by your real estate lawyer. While some sellers try to negotiate commission rates or go the “for sale by owner” (FSBO) route, traditional sales almost always involve this cost.

Legal Fees and Disbursements: 

You’ll need a real estate lawyer to manage the legal paperwork, discharge your mortgage (if any), and handle title transfers. Legal fees for sellers usually fall between $700 and $1,500, depending on the lawyer and the complexity of the transaction. This includes disbursements, like title searches and bank transfer fees.

Mortgage Discharge Fee or Penalty:

If you’re still paying off a mortgage, you may face early discharge penalties from your lender, especially if you’re locked into a fixed-rate mortgage. These penalties can be a few months’ worth of interest or calculated using an interest rate differential (IRD). Your lender will also charge a mortgage discharge fee, usually between $200 and $400, to formally remove the lien from the title.

Adjustments and Prepaid Costs:

Your lawyer will help you calculate adjustments for any prepaid expenses like property taxes, condo fees, or utilities. If you’ve prepaid for a period that extends beyond your closing date, the buyer will reimburse you. These amounts can differ but are usually calculated down to the day.

Let’s say you sell your Toronto condo for $750,000.

You pay a 5% agent commission ($37,500).

Your real estate lawyer charges $1,200, including disbursements.

You still owe money on a fixed-rate mortgage, and your lender charges a $3,000 penalty to break it.

Also, you’ve prepaid property taxes through the end of the month, and your lawyer calculates a $500 adjustment owed to you by the buyer.

Total closing costs? Around $41,200, not including any potential moving expenses. Knowing this ahead of time can help you plan your next move with confidence.

How to Estimate Your Total Closing Costs (Buyers & Sellers)

Planning ahead can make all the difference when it comes to closing costs. While exact numbers vary depending on location, property type, and other variables, here’s a practical breakdown of what buyers and sellers in Ontario can expect.

For Buyers: Typical Costs to Consider

• Land Transfer Tax

This is one of the biggest expenses. In Ontario, it’s a tiered system, and if you’re buying in Toronto, you’ll pay both provincial and municipal land transfer tax.

• Legal Fees & Disbursements 

Expect to pay anywhere from $1,000 to $2,500. This includes your real estate lawyer’s time plus third-party costs like title searches, registrations, and couriers.

• Title Insurance

Usually under $500, title insurance protects you against future property ownership issues.

• Home Inspection & Appraisal 

A home inspection ranges from $300 to $600, and a lender-required appraisal can add another $300–$500.

• CMHC Insurance (for buyers with <20% down) 

This is usually rolled into your mortgage, but it’s still a significant cost based on your loan amount and down payment.

• Prepaid Costs (e.g., property tax adjustments, utility bill balances)

These are often calculated by your lawyer and added to your closing statement.
 

For Sellers: Costs You’ll Likely Face

• Real Estate Commission

 Typically 4–5% of the sale price, split between buyer and seller agents.

• Legal Fees 

Around $1,000–$1,500, depending on complexity.

• Mortgage Discharge Fees & Penalties

If you break a fixed mortgage, your lender may charge thousands. Variable-rate penalties are usually lower.

• Status Certificate (for condos)

If you’re selling a condo, you may need to provide a status certificate, which costs about $100.
 

Quick Tip:

Ask your lawyer for a detailed estimate before closing day. A good real estate lawyer will outline every charge, so you’re not caught off guard at the last minute.

How a Real Estate Lawyer Helps Manage Closing Costs

Getting the hang of closing costs can be stressful, especially with surprise fees or last-minute adjustments. This is where an experienced real estate lawyer in Ontario becomes an invaluable asset.

Accurate Cost Breakdown

A real estate lawyer makes sure that you get a clear breakdown of all closing costs well before closing day. They review the purchase agreement, identify hidden costs, and explain which charges are negotiable, saving you from paying more than necessary.

Handling Legal & Financial Adjustments

From property tax prorations to utility bill adjustments and deposit transfers, your lawyer handles the financial back-and-forth between parties. This helps keep things organized and compliant, especially for first-time homebuyers or condo purchasers unfamiliar with the process.

Title Insurance & Disbursements

Your lawyer will arrange title insurance and manage disbursements (fees paid to third parties). They also ensure all funds are transferred securely and that the title is registered properly in your name, avoiding future disputes.

Peace of Mind

Buying or selling property is a major financial step. With a lawyer by your side, you’re protected from last-minute legal issues or misunderstandings that could delay closing or cost you thousands.

Khan Law Can Help You Close with Confidence

Buying or selling real estate in Ontario involves more than just paperwork, it requires legal clarity, financial transparency, and peace of mind. At Khan Law, we simplify the process by helping you understand your closing costs, protect your interests, and make sure that every detail is accounted for.

From the first review of your Agreement of Purchase and Sale to the final transfer of funds, we’re with you at every step. If you’re planning a move, a refinance, or a real estate investment, connect with our team to make your closing smooth, stress-free, and fully protected.

Frequently Asked Questions

1. What are the average closing costs in Ontario for a homebuyer?

Closing costs typically range from 1.5% to 4% of the purchase price. This includes land transfer tax, legal fees, title insurance, and adjustments like prepaid utilities or property taxes.

2. Do first-time homebuyers get any closing cost rebates in Ontario?

Yes. First-time homebuyers may be eligible for a Land Transfer Tax Rebate of up to $4,000 in Ontario, which can significantly reduce their closing costs.

3. Are closing costs negotiable with the seller?

Some costs (like adjustments or certain fees) may be negotiable as part of the purchase agreement. Your real estate lawyer can help you identify where savings are possible.

4. When are closing costs due?

Most closing costs are due on the closing day, when the property is legally transferred. Your lawyer will provide a final statement of adjustments and handle the disbursements on your behalf.