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The average closing cost in Ontario is roughly $20,000 after taxes or approximately 2-5% of the final home sale price.
Remember, these averages are based on sample data. Your closing costs may vary based on your lender, the size of your loan and whether you’re paying in cash.
Buyers in Ontario pay an average of $5,000-$20,000 in land transfer taxes (LTT). The reason why this range is so wide is because Ontario has two LTT rates. If you live in the Greater Toronto Area (Toronto and 25 surrounding, populous cities), you need to pay a provincial and municipal LTT. This rate is the same for both, so you end up paying twice as much as you would if you lived outside of the GTA. If you’re buying a property outside of the GTA, you only have to pay the provincial portion of the LTT.
The LTT is a sliding scale tax that increases in rate the higher the property value:
For example, on the sale of a property valued at $600,000, you would be charged 0.5% on the first $55,000, 1% on the next $195,000, 1.5% on the next $150,000 and 2% on the remaining $200,000 for a combined total of $8,475. Thus, you will pay a provincial LTT of $8,475 if you live outside of the GTA and double that, $16,950, if you live in the GTA.
Ontario has a Harmonized Sales Tax (HST), which is essentially a combination of the GST and the PST. The HST rate is 13%, but it is not charged in all circumstances. In Ontario, the HST is only payable on the sale of brand new properties or properties that have been substantially renovated.
Yes, there is a rebate available to homebuyers in Ontario. If you purchase a brand new home with a sale price of $400,000 or less, you are eligible to receive a 75% rebate on the PST portion (8%) of the HST and a 36% rebate on the GST portion (5%) of the HST.
For example, if you bought a brand new house valued at $400,000, you would need to pay a total of $52,000 in HST (13%). The HST you would need to pay can be broken down to $32,000 for the PST (8%) and $20,000 for the GST (5%). On the PST portion of the HST, you are eligible for a rebate of $24,000 (75% of $32,000). The maximum rebate you can receive on the provincial portion of the HST in Ontario is $24,000.
On the same $400,000 home sale price, the GST portion of the HST works out to $20,000. You are eligible for a rebate of 36% on this $20,000, which works out to $7,200. Combine that with the PST rebate of $24,000 and you should earn back a rebate of $31,200 on the $400,000 property.
The closing costs for buying a home in Ontario are among the highest in Canada because of its higher average housing price. Unlike a few other provinces in Canada that only use the GST on the sale of new properties, Ontario uses the HST, which is a higher tax rate and can significantly drive up the closing costs.
Closing costs are inevitable when you’re buying a property. The exact amount will vary depending on what the final sale price is on your property in Ontario. If you’re purchasing property in the GTA, expect to pay twice as much in LTT than outside of it. Not factoring in the HST, it is safe to budget 2-5% of the final sale price for closing costs as most of it will be going to the LTT. In cases where you buy a brand new property, you will have to pay the HST and this can raise your closing costs as high as 15-18% (not taking into account the rebate).
Want to learn more about mortgages? Head to our guide here.
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