One of the most common questions regarding Purchasing and Selling Real Estate is what
are the costs involve. Below is brief summary of expenses incurred, when transactions
are handled properly and professionally. Buyers should budget approximately 2-3% of the
purchase price for closing costs.
Land Transfer Tax
This is paid by the Buyer on the date of final closing to the Treasurer of Ontario pursuant
to the Land Transfer Tax Act. The tax is based on the purchase price and the current rates
became effective on June 1st,1989.
The rates are as follows for a single family residence:
$55,001-$250,000 1% less $275.00
$250,001-$400,000 1.5% less $1525.00
$400,001 - and up 2.0% less $3525.00
Example: To calculate the land transfer tax on a purchase price of $350,000, multiply the
purchase price by 1.5% and deduct $1,525 ($5,250 - $1,525 = $3725)
Disbursements – Purchase
Buyers are responsible to pay for certain disbursements carried out by their lawyer in
respect of various searches, certificates, and registrations. Approximate examples of
disbursements are ....
1) Registration of Deed $75
2) Registration of Mortgage $75
3) Municipal and utility searches OR title insurance $270.00
4) Abstract of Title & Execution Certificate $150.00
5) Transaction Levy $50.00
6) Couriers, photocopies, postage, closing agent $75.00
For a typical purchase (including one mortgage), a Buyer should budget about $650.00 for
disbursements. There will also be further costs for land transfer tax, adjustments, and legal
Note: All Costs are approximate and for guidance only.
Title insurance insures against past problems that could affect your ownership in the future.
A low, one-time premium covers you for loss or damage up to the policy amount and all
legal costs you would have to pay to defend your title. Once the policy is issued, a covered
title problem is not your concern. It’s the Insurance Companies as they will assume the risk.
No survey is required by your lending institution if you have title insurance. Note: The cost
of title insurance is not having to pay the majority of the above noted disbursements. It is
highly recommended that all purchasers obtain title insurance! Your Lawyer should discuss
Title Insurance with you.
The Seller in a real estate transaction is not required to pay any Land Transfer Tax. The
Seller is however responsible to pay for certain disbursements incurred by their lawyer.
Approximate examples of disbursements are ....
Registration of a Discharge of Mortgage $50.00
Transaction Levy $50.00
Couriers, photocopies, postage, closing agent $75.00
For a typical sale (one mortgage to discharge), a Seller should budget about $175.00 for
There will also be further costs for adjustments and legal fees. Adjustments on Closing
Between Seller and Buyer will be adjusted to the sale price and will appear on a Statement
of Adjustments as credits in favor of the Seller or the Buyer. Examples of common
Taxes, if taxes for the calendar year are $2,400.00, the deal closes June 30th and the
Seller has paid the taxes for the entire calendar year, there will a credit on closing to the
Seller of $1,200.00. In other words, the Seller receives $1,200.00 more and the Buyer pays
Propane, if the property had a propane tank, the Seller is usually asked to fill the tank on
closing and sells a full tank to the Buyer. If the propane cost approximately 48 cents per
litre inc HST for 850 litres. The Seller would receive $408.00 more and the Buyer pays
$408.00 more on closing.
Some mortgage institutions may require a Buyer to produce a recent survey for the real
property being purchased showing the boundaries of the lands and the location of the
dwelling thereon. If the Buyer requires a survey for the lender and the Seller does not
have one, it is usually the responsibility and the expense of the Buyer not the Seller to
have a new one prepared by an Ontario Land Surveyor. Title insurance will take care of
the problems incurred in the absence of a survey or an up to date survey! It is highly
recommended that title insurance be obtained in the absence of a survey.
In the event that the amount of your first Mortgage on your purchase transaction exceeds
75% of the purchase price, it will be necessary for you to purchase, for the protection of the
Lender, mortgage loan insurance. This mortgage loan insurance premium that is paid is to
protect the lender in the event that the mortgage is not paid. Do not confuse this with life,
disability, or job loss insurance. The cost of the insurance premium is paid by the Buyer.
The amount of the mortgage insurance premium is calculated using a loan/value ratio, and
may be added to the mortgage amount.
Building Inspection Fees on House Inspection Fees
It is highly recommended that when purchasing a home that a building inspection be carried
out on the structure, either prior to making an offer on the property or at the time you have
entered into the Agreement of Purchase and Sale. The fee for a normal building inspection
on (can range from $250.00 to $500.00)
Approximate legal fees on a residential real estate transaction are Purchase $650 to $750
Sale $550 to $650.
NOTE: Remax Real Estate Centres Inc., does not take any responsibility for the accuracy
of the costs listed above. The costs are to give you an idea of the approximate expense
range. Also use an approximate range of value instead of one fixed amount. As mentioned
previously, Buyers should budget 2-3% of the purchase price for closing costs.