What it costs to sell a home in Ontario: commission, legal fees, mortgage penalties and capital gains basics

The congratulations call comes with one number: the sale price. But the money that lands in your account on closing day (the day you get paid and ownership passes) is a different number, on the final statement your lawyer sends.

In between, the commission, legal fees and the rest of your mortgage plus any penalty come off. A non-resident may also have tax money held back at closing; a resident pays any capital gains tax through that year’s tax return. This post is for anyone selling in Toronto or the GTA. It uses only facts checked in the law and official sources, and it is general information, not legal or tax advice.

The answer first: what comes off the sale price

• NoneCommission rate set by law (TRESA s. 36(1))
• 13%HST added to the commission (as of 2026)
• ½Share of the gain that is taxed on a home you did not live in (Income Tax Act s. 38, as of 2026), except homes sold within 365 days
• 25%Buyer’s liability when a non-resident sells without a certificate (Income Tax Act s. 116(5); 50% for some property, such as a rental building)

“Does the seller pay land transfer tax?” No. Under s. 2(1) of the Land Transfer Tax Act, the buyer pays it.

Commission: no rate is set by law

Section 36(1) of Ontario’s Trust in Real Estate Services Act (TRESA) only says the commission must be an agreed amount, a percentage of the sale price, or a mix of both. Under O. Reg. 567/05, s. 23(3), an agent may not suggest that a commission is fixed by RECO (the Real Estate Council of Ontario, which regulates agents and brokerages), a government or a real estate board. The law has no “standard rate”.

The commission is written in the listing agreement (your written contract with a brokerage to sell your home). Under s. 13.4 of the regulation, it must clearly show how your brokerage’s share and the buyer’s brokerage’s share are worked out. Read those two lines and the expiry date before you sign. HST (harmonized sales tax) of 13% is added to the commission.

(Opinion) Do not compare commissions by the number alone. Ask what it pays for, such as photos, advertising and negotiation.

Legal fees: a written quote, not a guess

In Ontario the seller needs a real estate lawyer too, because only a lawyer may make the statements that a transfer (the document that moves ownership) must contain. The seller’s lawyer prepares the transfer. They pay off your mortgage from the sale money and remove it from the property’s title record (a discharge). Then they check the statement of adjustments (the sheet that splits property tax and condo fees by date) and send you the rest.

The bill is the legal fee (for the work) plus disbursements (costs such as registration), with HST added. Amounts differ by lawyer and deal, so this post gives no figure. Before you hire, get the total and what it includes in a written quote. RECO also lists commissions, legal fees and moving costs as closing costs of selling.

Mortgage penalty: 3 months’ interest or the IRD

If you pay off a closed mortgage before its term ends, the lender usually charges a penalty. Selling means paying the mortgage off in full at closing, so if you sell mid-term, include this cost. An open mortgage can be paid off without a penalty.

The Financial Consumer Agency of Canada (FCAC) describes two common methods: 3 months’ interest (3 months of interest on your balance) and the interest rate differential (IRD, based on the gap between your rate and today’s rate for the time left). Your contract may say “the higher of the two”. In FCAC’s hypothetical example, with a $200,000 balance at 6%, 36 months left and a 4% rate today, 3 months’ interest is $3,000 and the IRD is $12,000.

“Why not sell when the term ends?” If you pay off on the day the term ends, this calculation does not apply (check your contract). The downside: the market and your moving date do not wait for that day. If you are buying another home, ask whether you can move (“port”) your mortgage.

The amount changes every day (FCAC). Get it from your lender in writing, and again before closing. If you (not a company) took out a mortgage with a term longer than 5 years, the penalty after year 5 is capped at 3 months’ interest (federal Interest Act, s. 10).

Capital gains tax: first, did you live there?

Canada has no separate “capital gains tax”. Part of your profit from a sale is added to your income and taxed. The gain is the sale price minus your cost (the adjusted cost base: what you paid plus buying costs and major improvements) and what you spent to sell, such as commission and legal fees (Income Tax Act s. 40(1)).

If it was your home, the principal residence exemption usually means no tax. But you must designate it as your principal residence on your tax return for the year you sell (s. 54). If you rented it out for some years, the exemption may shrink, so check with an accountant.

The 365-day rule has exceptions in the law, such as death, marriage breakdown, serious illness, job loss and an eligible relocation (s. 12(13)). Check with an accountant whether yours applies.

If you live abroad: 25% can be held back

Section 116 of the Income Tax Act applies when a non-resident for tax purposes (a different test from citizenship) sells a home in Canada. For example, you sell your Toronto home after moving back to Korea. Unless you notified the Canada Revenue Agency (CRA) before the sale (s. 116(1)), you must tell it within 10 days after the sale (s. 116(3)).

If the buyer does not get a CRA certificate, the buyer is liable to pay 25% of the price on your behalf and may hold that amount back (s. 116(5)). If the home was rented out, the building can count as depreciable property, and that part can be 50% (s. 116(5.3)). So the buyer’s lawyer usually keeps that money (a holdback) until the certificate comes. (Opinion) Talk to an accountant before deciding whether to sell before or after you leave.

Common mistakes

• Treating the sale price as your money — budget your next home with the net amount.
• Signing the listing agreement without reading the two commission lines and the expiry date.
• Getting the penalty only by phone — get it in writing.
• Thinking there is nothing to report because it was your home — you must designate it as your principal residence.
• Forgetting the status certificate (the condo corporation’s report on its money and legal state) when you sell a condo — ordering it early can shorten the time the buyer needs to check their conditions, and the fee is capped at $100 including tax (O. Reg. 48/01 s. 18(4)).
• Buying another home with no backup plan if the two closing dates do not line up — RECO also advises a contingency plan.

In short: what you keep is the sale price minus commission and HST, legal fees, the mortgage and any penalty, and tax if it applies. Your one task today: ask your lender, in writing, for today’s penalty.