What closing costs should I expect when buying a home in Toronto?

The direct answer on buyer closing costs

When you buy a home here, plan for land transfer tax, legal fees and adjustments, plus the costs that come before and around closing: an inspection, insurance, any lender costs and the move. A purchase in the City of Toronto carries both a provincial and a municipal land transfer tax. That second tax is the item buyers from elsewhere in Ontario most often leave out of their budget, simply because they have never had to pay it before.

This matters because closing costs are paid on top of your down payment, and many of them need to be available as funds by closing. Your lawyer confirms exactly what is due and when. A buyer who budgets only for the price and the down payment can find the final weeks stressful, or discover too late that the numbers do not work. Knowing the categories early lets you build them in from the start, before you make an offer.

This article lists the categories and who confirms each one. It gives no amounts, rates or thresholds, because they vary by property and price and they change over time. It also does not interpret tax or lending rules. Every figure in your budget should come from the official provincial and municipal land transfer tax calculators, your real estate lawyer, your lender or your insurance agent, confirmed close to the date you need it.

How land transfer tax works here

Land transfer tax is charged when ownership of a property transfers to you. Across Ontario, a buyer pays the provincial tax. In the City of Toronto, a buyer pays the provincial tax and a separate municipal one on the same purchase. If you are moving from another Ontario city, this is an important difference to plan for, because it is easy to budget for one tax out of habit and only discover the second one late.

The amount depends on the purchase price and on rules that can change, so do not estimate it from memory or from a friend’s purchase. Use the official provincial calculator and the official municipal calculator, and enter the price you are actually considering. Run them again whenever your price range moves. Your real estate lawyer can confirm the final figures as part of closing, and should be your first call if a result looks wrong.

You may also hear that some buyers qualify for a rebate or a reduced amount. Eligibility depends on official rules and your own circumstances, and it is not something to assume. Ask your real estate lawyer whether anything applies to you, and check the official provincial and municipal sources. Until it is confirmed, budget as if you will pay both taxes in full. A pleasant surprise at closing is much easier to absorb than a shortfall.

Legal fees and closing adjustments explained

Your real estate lawyer handles the legal side of the purchase: reviewing documents, searching title, registering the transfer and moving the funds at closing. Legal fees and the lawyer’s out-of-pocket costs, often called disbursements, vary from one lawyer to another. Ask for a written estimate before you choose a lawyer, and ask what it includes and what might be added later. Compare estimates on the same basis so the comparison is fair.

Adjustments are the amounts that settle costs the seller has already paid, or still owes, for a period when you will own the home. Property tax and, for a condo, monthly fees are common examples. Your lawyer calculates them before closing and shows them to you. You cannot know the final figure in advance, but you can ask your lawyer which items are likely to appear and set aside some room for them.

Some buyers are surprised that the final amount due is not simply the price minus the deposit and the mortgage. Adjustments, land transfer taxes and legal costs all sit in between. Ask your lawyer when the final figure will be ready and how the funds must be provided. Then keep that money available and untouched in the weeks before closing, so you are not scrambling to move money at the last moment.

Costs that arrive before closing day

Several costs come earlier than closing, or alongside it, and they belong in the same budget. They are easy to miss because they are paid to different people at different times. List them now, even without amounts, so none of them arrives as a surprise. Next to each one, write who confirms the cost, so you know exactly whom to call when you need a current figure.

• A home inspection booked with a licensed home inspector before you commit
• Home insurance quoted by an insurance agent, which your lender may ask to see
• Any mortgage-related costs, such as an appraisal, explained by your lender
• Moving, utility setup and any immediate repairs or furnishings you plan for

For a condo, add the cost of the condo status certificate if you are responsible for ordering it, along with your lawyer’s review of it. Ask too about any move-in fees or deposits the building charges. Your lawyer and the condo corporation’s documents are the sources for these. None of them needs to be a surprise when you know to ask about them early in the process.

Who confirms each closing cost

Each closing cost has a responsible source, and the simplest way to keep your budget honest is to match every line to the person or office that confirms it. The table below sets that out. It names categories only, with no amounts, and it does not describe rules. Use it as a checklist when you speak with each professional, and record the date of every answer you receive.

Cost	What it covers	Who confirms it
Provincial land transfer tax	Tax on the transfer of ownership in Ontario	Official Ontario calculator and your lawyer
Municipal land transfer tax	A separate municipal tax on the same purchase	Official City of Toronto calculator and your lawyer
Legal fees and disbursements	Documents, title search, registration and closing funds	Your real estate lawyer, in a written estimate
Closing adjustments	Property tax or condo fees the seller prepaid or owes	Your real estate lawyer, before closing
Inspection, insurance and lender costs	Condition, coverage and any mortgage-related charges	Home inspector, insurance agent and lender

If any row in your own version of this table is blank, that is the question to ask next. A complete table, even with estimated figures from the right sources, gives you a much clearer picture than a single guessed total. Keep it with your other purchase documents and update it whenever a price, a lawyer’s estimate or a lender’s terms change.

Where buyers’ budgets usually go wrong

The most common budgeting mistake here is counting one land transfer tax instead of two. The next is treating the down payment as the whole cash requirement, with nothing set aside for legal fees, adjustments and the move. Another is relying on a cost figure from someone else’s purchase, which may reflect a different price, a different property type or a different year. Your own numbers need your own sources.

Rate headlines cause a subtler mistake. Buyers sometimes stretch their budget, or put off a decision, based on what they expect the Bank of Canada to do next. Nobody can tell you that reliably, and this article does not try. Ask a lender how current rates affect your payment, build your closing costs on top of that, and make the decision on numbers you can confirm today.

Preparing your closing cost list now

Before you start making offers, put together a simple closing cost list. You do not need final numbers yet. You need the categories, the sources and a rough figure from each source for the price range you are considering. Doing this early makes your conversation with a lender more useful and keeps the final weeks before closing calm. Start with these items and add to them as you go.

• Run both official land transfer tax calculators at your target price
• Request a written estimate of legal fees and disbursements from a real estate lawyer
• Ask your lender which mortgage-related costs apply to you and when they are paid
• Get a home insurance quote from an insurance agent for the property type you want

If you would like to talk through what a purchase in the city involves, you are welcome to bring your list to Daniel. You do not need to have every figure, or to have found a home yet. Daniel can help with the real estate side of the purchase and point each remaining question to the person who answers it. Which line on your list is the hardest to pin down right now?

This article is general information about selling and buying homes in Toronto and Ontario. It is not legal, estate, tax, lending or inspection advice and does not predict prices or rates or promise results. Confirm estate questions with an estate lawyer, taxes with an accountant, land transfer tax with the official Ontario and City of Toronto calculators, financing with a lender, and condo documents with your lawyer. Daniel Warchow, Sotheby’s International Realty Canada.