1. What Are Closing Costs?

Closing costs are additional expenses beyond the property's purchase price that buyers must pay when finalizing a real estate transaction in Ontario. These typically include land transfer tax, legal fees, title insurance, and other administrative costs.

2. How Are Closing Costs Calculated?

The main components of closing costs are:

Where:

• Land Transfer Tax — Provincial (and sometimes municipal) tax based on property value
• Legal Fees — Typically $1,000-$2,500 for lawyer/notary services
• Title Insurance — Usually $200-$600 to protect against title defects
• Other Fees — May include disbursements, adjustments, etc.

3. Understanding Land Transfer Tax

Ontario Land Transfer Tax: Progressive tax calculated as:

• 0.5% on first $55,000
• 1.0% on $55,000.01 to $250,000
• 1.5% on $250,000.01 to $400,000
• 2.0% on $400,000.01 to $2,000,000
• 2.5% on amounts over $2,000,000

Toronto Land Transfer Tax: Additional tax with same brackets for properties in Toronto.

4. First-Time Home Buyer Rebates

First-Time Home Buyers may qualify for rebates:

• Up to $4,000 maximum rebate for Ontario Land Transfer Tax
• Up to $4,475 maximum rebate for Toronto Land Transfer Tax

To qualify, you must be at least 18 years old, purchasing for personal use, and not have owned a home anywhere in the world.

5. Frequently Asked Questions (FAQ)

Q1: Are closing costs included in my mortgage?
A: No, closing costs are separate from your down payment and must be paid in addition to your mortgage.

Q2: How much should I budget for closing costs?
A: Typically 1.5%-4% of purchase price for resale homes, 2%-2.5% for new constructions.

Q3: Can I negotiate closing costs?
A: Some fees (like legal fees) may be negotiable, but taxes are fixed by law.

Q4: What's included in "other fees"?
A: May include property tax adjustments, utility adjustments, home inspection fees, etc.

Q5: Do I need title insurance?
A: While not legally required, it's highly recommended to protect against title defects and fraud.