Ontario Land Transfer Tax: The Biggest Closing Cost
Ontario's land transfer tax is calculated on a sliding scale: 0.5% on the first $55,000, 1% on $55,001–$250,000, 1.5% on $250,001–$400,000, and 2% on amounts above $400,000 (with an additional 0.5% on amounts over $2 million). For a $700,000 home, that's approximately $11,475 in provincial land transfer tax alone. If you're buying in Toronto, double those costs — the City of Toronto charges its own municipal land transfer tax at similar rates. First-time buyers can claim rebates (up to $4,000 provincial, up to $4,475 Toronto), but repeat buyers need to budget the full amount.
Legal Fees and Title Insurance
You'll need a real estate lawyer to close your purchase, and Ontario legal fees typically range from $1,500 to $2,500 including disbursements. Title insurance, which protects against fraud, survey issues, and title defects, costs $300–$500 and is strongly recommended by most lenders. Some lawyers include title insurance in their flat-fee package, while others charge it separately. I always recommend getting quotes from at least two lawyers — fees can vary significantly for the same service. Your mortgage broker or real estate agent can recommend trusted professionals.
CMHC Mortgage Insurance (If Down Payment Is Under 20%)
If your down payment is less than 20% of the purchase price, you're required to purchase mortgage default insurance through CMHC, Sagen, or Canada Guaranty. The premium ranges from 2.8% to 4% of your mortgage amount depending on your down payment percentage. On a $650,000 home with 10% down, you'd pay roughly $16,185 in insurance premium, which is typically added to your mortgage balance. While this adds to your total cost, it also gives you access to lower interest rates because insured mortgages carry less risk for lenders.
Home Inspection, Appraisal, and Other Pre-Closing Costs
A home inspection costs $400–$600 in Ontario and is money well spent — it can uncover issues that save you thousands or give you negotiating leverage. An appraisal, if required by your lender, runs $300–$500, though many lenders now accept automated valuations for properties in urban Ontario. You should also budget for a property survey ($1,500–$2,000 if one doesn't exist, though title insurance can substitute in most cases), utility connection fees ($50–$200), and your first property tax and utility payments which may be due at or shortly after closing.
The Complete Closing Cost Checklist
Here's your total budget checklist for closing on an Ontario home: Land transfer tax (provincial and municipal if applicable), legal fees and disbursements, title insurance, mortgage default insurance (if applicable), home inspection, appraisal fee, moving costs ($1,000–$3,000), utility hookup and connection fees, property tax adjustment, home insurance (required before closing), and a contingency fund of at least $2,000 for unexpected expenses. For a $700,000 home in the GTA with 10% down, budget approximately $25,000–$35,000 in total closing costs beyond your down payment. I provide every client with a personalized closing cost estimate so there are no surprises.
Frequently Asked Questions
How much are closing costs on a house in Ontario?
Closing costs in Ontario typically range from 1.5% to 4% of the purchase price, depending on factors like location (Toronto has extra land transfer tax), down payment size, and whether you need mortgage insurance. For a $700,000 home, expect $25,000–$35,000 in total closing costs.
Are closing costs tax deductible in Ontario?
Most closing costs on a primary residence are not tax deductible. However, if you're purchasing a rental or investment property, many costs including legal fees, appraisal fees, and mortgage insurance premiums may be deductible. Consult your accountant for your specific situation.
Can closing costs be rolled into my mortgage in Ontario?
CMHC mortgage insurance is typically added to your mortgage balance. However, other closing costs like land transfer tax, legal fees, and home inspection cannot be rolled into a conventional mortgage. Some lenders offer cash-back mortgages that can help offset closing costs, though they usually come with a slightly higher rate.
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