What Will You Keep When You Sell? The Costs of Selling a Home in Ontario

What you keep is your sale price minus a handful of costs: real estate commission plus HST, your lawyer’s fees, paying off your mortgage (and any penalty for breaking it early), and the cost of getting ready and moving. Land transfer tax is paid by the buyer, not you. If the home was your principal residence, you usually still need to report the sale on your tax return. Knowing these numbers before you list makes every other decision easier, from price to timing to what you buy next.

This is general information, not legal, tax or financial advice, and not an appraisal. Confirm your own numbers with your lawyer, lender and accountant.

The costs that come off your sale price

Real estate commission, plus HST

Commission is set out in your listing agreement, and we go through it with you before you sign. HST is charged on top of it. In Ontario the HST rate is 13% (Canada Revenue Agency).

Your lawyer’s fees

A real estate lawyer handles the closing for you, including paying out your mortgage from the sale money. Fees and disbursements vary by lawyer and by file, so ask for a written quote early.

Paying off your mortgage, and any penalty

Whatever you still owe is paid from the sale proceeds on closing. If you break your mortgage before the end of its term, there may be a prepayment penalty. The Financial Consumer Agency of Canada says the penalty is usually the higher of three months’ interest or the interest rate differential, and you may also pay an administration fee (FCAC).

It is also worth asking whether you can port your mortgage, which means taking your rate and terms to your next home. Ask your lender for the exact payout figure and your options before you list. Confirm with your lender.

Adjustments on closing

Some costs are shared on the closing date, such as property taxes you have already paid for the year. Your lawyer will walk you through these.

Getting ready and moving

Repairs, cleaning, any staging, movers and storage all come out of your pocket. Our post on what to fix, and what to skip, before you list can help you keep this part small. If you are buying at the same time and need bridge financing, ask your lender about the cost.

What sellers usually do not pay

Land transfer tax. In Ontario, the person who acquires the property pays land transfer tax when the deal closes (Government of Ontario). As a seller, it is not on your list, though it will be if you are buying your next home in Ontario.

The tax question: report the sale

If your home was your principal residence for every year you owned it, the gain is usually covered by the principal residence exemption. You still have to report it. The Canada Revenue Agency says you report the sale on Schedule 3 of your return, and for sales in 2017 and later you also complete Form T2091 (CRA).

If you miss it, the CRA may accept a late designation, but a penalty may apply: the lesser of $8,000 or $100 for each full month late. Rentals, a basement suite, or years you lived elsewhere can change the picture. Confirm with your accountant or tax advisor.

A simple way to estimate your number

1. Start with a realistic sale price from a local review, not an online guess.
2. Subtract your mortgage payout, including any penalty or fee your lender quotes.
3. Subtract commission plus HST.
4. Subtract your lawyer’s quote.
5. Subtract what you expect to spend on repairs, staging and moving.

What is left is a planning number, not a promise. Our net proceeds calculator walks you through the same steps.

Frequently asked questions

Do I pay land transfer tax when I sell?
No. In Ontario it is paid by the person acquiring the property, when the deal closes.

Will I pay tax on the profit from selling my home?
Often not, if it was your principal residence for every year you owned it. You still need to report the sale. Confirm with your accountant or tax advisor.

Can I avoid a mortgage penalty?
Sometimes. Ask your lender about porting, or about the timing of your term. Confirm with your lender.

Want a real number for your home?

Your sale price is the biggest number in the math, so start there. Get a home value review from Sarin Team, or call or text 705-500-5333. We reply the same business day.

Sarin Team, Sumant Sarin and Shelley Sarin, Royal LePage PRG Real Estate, Brokerage. contact@sarinteam.ca.

General information only. It is not legal, tax or financial advice, and it is not an appraisal.