The costs of selling a home in Ontario: every line item

The costs of selling a home in Ontario fall into four groups: real estate commission plus 13% HST on it, legal fees and disbursements, paying off your mortgage (including any prepayment penalty), and moving. Depending on your situation, you may also pay for repairs, staging, bridge financing, or tax on a capital gain if the home was not your principal residence every year. Sellers do not pay land transfer tax in Ontario; the buyer does.

Below is every line item, how it is calculated, and who to ask for the exact figure. For a quick estimate on your own numbers, use the selling costs calculator.

The costs at a glance

Cost	Who sets it	When you pay	Notes
Commission	Negotiated with the brokerage	On closing, from sale proceeds	Flat fee, percentage, or both
HST on commission	Federal and provincial law	On closing, with commission	13% in Ontario
Legal fees and disbursements	Your lawyer	On closing	Get a written quote
Mortgage payout	Your lender	On closing	Lawyer pays it from proceeds
Prepayment penalty	Your mortgage contract	On closing	Ask for a payout statement early
Moving	Mover or you	Around closing	Book early in spring and summer
Repairs, cleaning, staging	You	Before listing	Optional; spend where buyers notice
Capital gains tax	CRA rules	With your tax return	Usually nil on a principal residence

How much is real estate commission in Ontario?

There is no standard rate. The Real Estate Council of Ontario (RECO) states that you and the brokerage decide the amount, and that it is not fixed or approved by RECO, any government or any real estate association. It can be a fixed dollar amount, a percentage of the sale price, or a combination. One thing it cannot be: an amount based on the difference between the list price and the sale price.

Your listing agreement spells out the total commission and what your brokerage offers to the buyer's brokerage, if anything. Read the holdover clause too. It can mean you owe commission after the listing expires if you sell to a buyer who was introduced during the listing period.

HST on commission

Commission is a taxable service, and the HST rate in Ontario is 13% (5% federal plus 8% provincial), per the Canada Revenue Agency. HST is calculated on the commission, not on the sale price. As a simple example, a $20,000 commission carries $2,600 in HST, for $22,600 in total. This is the line people most often forget when they estimate their net.

When you interview agents, ask each one to put their proposal in writing: the total commission, the portion offered to the buyer's brokerage, what is included (photography, video, staging advice, marketing), and the length of the holdover period. Comparing those side by side tells you far more than comparing a single percentage.

What do lawyers charge to sell a house in Ontario?

You need a real estate lawyer to close a sale in Ontario. They review the agreement, get your mortgage payout statement, prepare the transfer documents, pay out your mortgage and the brokerage, and send you the balance. The bill has two parts: the legal fee, and disbursements (out-of-pocket items such as registration costs, courier and searches), plus HST on the taxable portions.

Fees vary by firm and by how complicated the deal is. A straightforward sale of a home with one mortgage costs less than an estate sale, a property with several mortgages or liens, or a rural property with title or survey questions. Ask two or three local firms for an all-in written quote before you list.

Paying off your mortgage: discharge and prepayment penalties

Your lawyer pays your mortgage out of the sale proceeds on closing. Your lender will charge for the payout statement and discharge in most cases. The larger number to watch is a prepayment penalty if you break your mortgage before the end of its term.

How prepayment penalties are calculated

According to the Financial Consumer Agency of Canada (FCAC), the penalty on a fixed-rate mortgage is usually the higher of:

• three months' interest on what you still owe, or
• the interest rate differential (IRD): the difference between the interest you would pay for the rest of the term at your rate and at a comparison rate the lender sets.

FCAC's own example shows how wide the gap can be: three months' interest of $3,000 against an IRD of $12,000, so the penalty is $12,000. Because many lenders base the IRD on posted rates rather than your discounted rate, the result can be much higher than people expect. Lenders must explain how they calculated the penalty and, for an IRD, show the balance, your rate and the comparison rate.

What to do: before you list, ask your lender for a written payout statement with a penalty estimate as of your likely closing date. Ask whether your mortgage is portable to a new home, or whether the buyer could assume it. Either can reduce or avoid the penalty.

Moving, repairs and staging

Moving costs depend on distance, volume and season. Spring and summer are busier in lake country, so book movers early. If you are moving out of a large rural property, budget for junk removal and possibly a storage unit.

Pre-listing repairs, deep cleaning and staging are optional costs. Spend where buyers in your price band will notice and pay for it: obvious maintenance, fresh paint in tired rooms, and anything an inspector is likely to flag. Your agent should be able to tell you which items matter and which will just be negotiated off the price.

If you buy before you sell, add bridge financing interest and fees. The downsizing guide covers how bridge loans work.

Do I pay capital gains tax when I sell my home?

Usually not on your home, but the reporting rule catches people.

The principal residence exemption

If the home was your principal residence for every year you owned it, the gain is generally not taxed. But the CRA requires you to report the sale on Schedule 3 of your tax return and complete Form T2091(IND) to designate the property as your principal residence. If you miss the designation, the CRA may accept a late designation in some cases, but a penalty may apply.

The CRA allows only one home to be designated as your family's principal residence for each year, and a cottage can qualify if your family lived in it during the year. That matters around here, because many families own both a house in town and a cottage. If you sell one, the designation you choose affects the tax on the other when it is sold later. This is a conversation for an accountant before you sell.

When tax can apply

Gains can be taxable on a cottage or second home, a rental property, a home with a rented unit or a business-use portion, or a home that was not your principal residence for all the years you owned it. Confirm your situation with an accountant.

Selling as a non-resident: section 116

If you are not a resident of Canada for tax purposes, extra CRA rules apply when you sell Canadian real estate. Under section 116 of the Income Tax Act:

• You must notify the CRA either before the sale or no later than 10 days after it. Late notice carries a penalty of $25 a day, with a minimum of $100 and a maximum of $2,500.
• When the CRA receives payment or security for the tax on your gain, it issues a certificate of compliance. A copy goes to the buyer.
• Without a certificate, the buyer is entitled to withhold 25% of the proceeds (50% on certain property, such as depreciable property), and the buyer is liable for that tax if they do not.

In practice, buyers' lawyers typically hold back the withholding amount until the certificate arrives, which can delay when you see your money. If you are a non-resident, or became one since you bought, talk to a cross-border accountant and your lawyer before you list. Withholding rates and procedures can change, so confirm the current rules with your accountant before closing.

Is there land transfer tax for sellers?

In Ontario, the buyer pays land transfer tax when the transfer is registered. There is no seller-side land transfer tax. If you built the home yourself or substantially renovated it, ask your accountant whether any GST/HST rules apply to your sale.

Property tax and utility adjustments

On closing, your lawyer adjusts property tax, and sometimes water or fuel oil, so each side pays for the days they own the home. If you have prepaid the year's taxes, you get a credit for the days after closing. If you are behind, the arrears come off your proceeds. This is a credit or debit, not a new cost, but it changes the size of your final cheque.

How Jordan can help

Jordan can walk you through a net proceeds sheet for your specific home, built from a pricing opinion on recent local sales and your actual mortgage numbers. He will tell you plainly what the commission is, what it covers, and what your brokerage offers to buyer brokerages. Call 705-345-0797.