Seller Closing Costs Ontario: The Complete Breakdown
Unlike buyers, who face land transfer tax, sellers in Ontario face a different cost structure that comes out of the sale proceeds. Here is every cost, completely.
Seller closing costs in Ontario include real estate commission (3.5%–5% plus 13% HST), legal fees ($2,000–$3,300), a mortgage discharge fee ($200–$400), any prepayment penalty (3 months' interest or IRD), and minor tax and utility adjustments. Sellers pay no land transfer tax. Net proceeds on a $1.2M home land around $1.11M–$1.13M.
The seller's costs come out of the sale proceeds rather than requiring cash at closing, but they are real, significant, and worth understanding completely before listing.
Every Seller Closing Cost in Ontario
Real Estate Commission (Largest Cost)
Combined commission in Ontario is 3.5% to 5% of the sale price plus 13% HST. On a $1,200,000 sale at 4%, that is $48,000 plus $6,240 HST, totaling $54,240. At 5%, it is $60,000 plus $7,800, totaling $67,800. Commission is negotiable.
Legal Fees
Your lawyer's fees typically run $1,500 to $2,500 plus disbursements of $300 to $800 for title search, registration, and administration, for a total of approximately $2,000 to $3,300.
Mortgage Discharge and Prepayment Penalty
The lender charges a discharge fee of $200 to $400 to register the discharge. Separately, breaking a mortgage early incurs a prepayment penalty: three months' interest on a variable rate, or the greater of three months' interest or the Interest Rate Differential on a fixed rate. The IRD can be $5,000 to $30,000 or more on a large fixed rate mortgage, so calculate your specific penalty before finalizing your timeline.
Adjustments and Other Outflows
Prepaid property taxes and condo fees are adjusted at closing, usually a minor credit to the seller. Pre-listing staging and photography ($3,000–$15,000) and moving ($1,500–$5,000) are real outflows, though not technically closing costs.
Neeraj Moolchandani on the no-land-transfer-tax advantage
A relief for sellers is that, unlike buyers, you pay no land transfer tax in Ontario. Your costs are dominated by commission and legal fees, with the mortgage penalty as the main variable.
Knowing the full picture before you list lets you plan around your true net proceeds rather than the headline sale price.
Net Proceeds Example — $1.2M Markham Detached
| Item | Amount |
|---|---|
| Sale price | $1,200,000 |
| Commission (4% + HST) | ($54,240) |
| Legal fees | ($2,750) |
| Mortgage discharge fee | ($300) |
| Mortgage prepayment penalty | ($0 – $20,000) |
| Pre-listing preparation | ($8,000) |
| Estimated net proceeds | $1,114,710 – $1,134,710 |
Know this number before you list. Michael John Lau provides every seller with a complete net proceeds analysis as part of the free consultation.
Frequently Asked Questions
Do sellers pay land transfer tax in Ontario?
No. Land transfer tax is a buyer's cost. The seller's largest cost is the real estate commission plus 13% HST, followed by legal fees and any mortgage costs.
What is a mortgage prepayment penalty in Ontario?
For a variable rate mortgage it is typically three months' interest; for a fixed rate it is the greater of three months' interest or the Interest Rate Differential, which can be $5,000 to $30,000 or more on a large mortgage.
What are typical seller closing costs on a $1.2M Markham home?
Roughly $57,000 to $85,000 including commission and HST, legal fees, mortgage discharge and any penalty, and preparation, leaving net proceeds around $1.11M to $1.13M.
Your Markham Home Deserves a Precise Valuation
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