Cost of Selling a House in Ontario: Fees and Disbursements
Selling a house in Ontario usually comes with four groups of costs: real estate commission plus 13% HST on that commission, legal fees and disbursements for the closing, mortgage costs such as a prepayment penalty and a lender discharge fee, and closing adjustments for property tax, utilities or condo fees. Commission is usually the largest item. A mortgage penalty is often the biggest surprise.
Two costs Ontario sellers do not pay: land transfer tax, which is the buyer’s cost, and HST on the sale price of a resale home. Your mortgage is paid out of the sale proceeds on closing day, so you do not need cash on hand to clear it.
On a hypothetical $900,000 sale with a $450,000 mortgage, these selling costs come to about $47,000 before adjustments, most of it commission, HST and a mortgage penalty. The sections below break down each cost, when it is paid and how to estimate what you will actually take home.
The Main Costs of Selling a House in Ontario
Real estate commission and HST
Commission is set in your listing agreement with the brokerage. No law fixes the rate, so it is negotiable. It is often a percentage of the sale price shared between the listing and buyer brokerages, though flat-fee and tiered arrangements also exist. Commission is a taxable service, so 13% HST is added on top. Sellers often leave the HST out of their estimate, and on a typical commission it adds several thousand dollars.
Legal fees and disbursements
Your legal fee pays for your lawyer’s work on the sale: reviewing the agreement, preparing the transfer and statement of adjustments, paying out your mortgage and sending you the balance. Disbursements are amounts your lawyer pays to third parties on your behalf, such as payout statement and registration charges, wire or courier fees, and any electronic signing or ID verification charges. HST applies to the fee and to most disbursements.
Ask for a written quote that lists the fee, each disbursement and HST separately. Under the Law Society of Ontario’s rules, a lawyer who advertises a fee must say whether disbursements and taxes are charged on top, so a clear quote should already show this.
Mortgage payout, prepayment penalty and discharge
If you sell before your mortgage term ends, your lender may charge a prepayment penalty. On many fixed-rate mortgages it is the greater of three months’ interest or an interest rate differential, which reflects the interest the lender loses by being paid early. Variable-rate mortgages commonly charge three months’ interest. Our article on avoiding the mortgage refinancing penalty explains both calculations and how prepayment privileges can reduce them. If you are buying again, ask your lender whether you can port the mortgage to the new home instead.
Lenders may also charge an administration or discharge fee. It appears on the payout statement, which your lawyer requests before closing. After the lender is paid, the mortgage is removed from title. Our guide to mortgage discharge on an Ontario home sale covers how that step works and what can hold it up.
Closing adjustments
The statement of adjustments squares up costs that run past closing day. If you prepaid property tax or condo fees for the rest of the month or year, you get a credit. If anything is owing, it is deducted from your proceeds.
Costs that depend on your situation
- Getting the home ready. Repairs, cleaning, staging, photography and moving are up to you and vary widely.
- Bridge financing. If your purchase closes before your sale, a bridge loan adds interest and possibly a lender fee.
- Capital gains. A principal residence is usually exempt. A rental, cottage or second property may create a taxable gain, so speak with an accountant before you list.
- Non-resident sellers. If you are not a resident of Canada for tax purposes, the buyer’s lawyer will usually hold back part of the price until the Canada Revenue Agency issues a clearance certificate. Plan for this well before closing.
When Each Cost Is Paid
| Stage | What happens | Costs at this stage |
|---|---|---|
| Before listing | Prepare the home, sign the listing agreement, ask your lender for a payout estimate | Repairs, staging, photography; penalty estimate |
| After an accepted offer | Your lawyer opens the file, reviews the agreement and requests the payout statement | Legal fee and disbursements begin |
| Before closing | Statement of adjustments prepared, documents signed in person or remotely | Signing, ID verification and courier charges |
| Closing day | Buyer’s funds arrive, your lawyer pays out the mortgage, commission and costs, then sends you the balance | Commission and HST, mortgage payout and penalty, legal fee and disbursements |
| After closing | Mortgage discharge registered on title | Usually none beyond amounts already paid |
The payoff step on closing day is where timing matters most. Our explainer on lender payoff in Ontario walks through how payout funds move and what keeps a closing on schedule.
Worked Example: Net Proceeds on a $900,000 Sale
This is a hypothetical example to show the math. Your commission rate, legal fees, penalty and adjustments will differ.
| Item | Amount |
|---|---|
| Sale price | $900,000 |
| Commission (example rate of 4%) | -$36,000 |
| HST on commission (13%) | -$4,680 |
| Legal fees and disbursements, including HST (example) | -$1,500 |
| Mortgage balance paid out | -$450,000 |
| Prepayment penalty (example) | -$5,000 |
| Property tax adjustment credit | +$800 |
| Estimated net proceeds | $403,620 |
Selling costs here total $47,180 before the adjustment credit. Commission and its HST make up about 86% of that, and the penalty is the next largest item.
How to Estimate Your Own Selling Costs
- Get your commission terms in writing from your agent, including HST.
- Ask your lender for a payout estimate that shows any prepayment penalty and discharge fee.
- Request an itemized legal quote that separates the fee, disbursements and HST.
- Check your last property tax bill and condo fee schedule to estimate adjustments.
- If the home is not your principal residence, or you live outside Canada, speak with an accountant early.
Get a Clear Picture Before You List
Knowing your net proceeds before you list makes it easier to set a price and plan your next move. RealEstateLawyers.ca LLP can send you an itemized quote for your sale and request your mortgage payout figures early, so your estimate is built on real numbers. Start with our home selling services.
Frequently Asked Questions
Do sellers pay land transfer tax in Ontario?
No. Land transfer tax is paid by the buyer when the transfer is registered.
Is there HST when you sell a house in Ontario?
Not on the sale price of a resale home you have lived in. HST does apply to services you pay for, including commission, legal fees and most disbursements.
How much is the mortgage penalty if I sell early?
It depends on your mortgage. Many fixed-rate mortgages charge the greater of three months’ interest or an interest rate differential, and variable-rate mortgages commonly charge three months’ interest. Your lender’s payout statement gives the exact figure.
When do I receive the money from my sale?
On closing day. The buyer’s lawyer sends the funds to your lawyer, who pays out your mortgage, commission and closing costs, then releases the balance to you.
Can I sign my sale documents remotely?
Many Ontario sales now close with remote ID verification and electronic signing. Some lenders still require original signed documents, so confirm the signing method with your lawyer early.
Who removes my mortgage from title after the sale?
Your lawyer pays out the lender on closing day, and the discharge is then registered on title. Your lawyer follows up until it is registered.
This article provides general information only and is not legal advice. For advice about your sale, speak with a lawyer.
