Beyond the Purchase Price
When budgeting for your Toronto home purchase, the sticker price is just the beginning. Closing costs typically add 1.5-4% to your total investment. Understanding these costs upfront prevents surprises and ensures you're truly prepared. This guide breaks down every closing cost you'll encounter.
Land Transfer Tax: The Big One
Toronto buyers face a double land transfer tax: Ontario provincial tax plus Toronto municipal tax. Combined, this is often the largest closing cost.
Ontario Land Transfer Tax Rates
- First $55,000: 0.5%
- $55,001 - $250,000: 1.0%
- $250,001 - $400,000: 1.5%
- $400,001 - $2,000,000: 2.0%
- Over $2,000,000: 2.5%
Toronto Municipal Land Transfer Tax
- First $55,000: 0.5%
- $55,001 - $250,000: 1.0%
- $250,001 - $400,000: 1.5%
- $400,001 - $2,000,000: 2.0%
- Over $2,000,000: 2.5%
Total Land Transfer Tax Examples
| Purchase Price | Ontario LTT | Toronto LTT | Total LTT |
|---|---|---|---|
| $700,000 | $11,475 | $11,475 | $22,950 |
| $1,000,000 | $17,475 | $17,475 | $34,950 |
| $1,500,000 | $27,475 | $27,475 | $54,950 |
| $2,000,000 | $37,475 | $37,475 | $74,950 |
First-Time Buyer Rebates
First-time buyers can significantly reduce land transfer tax burden:
Ontario First-Time Buyer Refund
- Maximum Refund: $4,000
- Eligibility: Never owned property worldwide, at least 18, occupying as primary residence
- Homes up to $368,000: Full refund of Ontario LTT
- $368,001 - $500,000: Partial refund (full $4,000 amount)
Toronto First-Time Buyer Rebate
- Maximum Rebate: $4,475
- Eligibility: Same as Ontario program
- Homes up to $400,000: Full refund of Toronto LTT
- Over $400,000: Maximum $4,475 rebate
Combined Savings Example
First-time buyer purchasing $700,000 home:
- Total LTT without rebates: $22,950
- Ontario rebate: -$4,000
- Toronto rebate: -$4,475
- Net LTT paid: $14,475
Legal Fees and Disbursements
Your real estate lawyer handles title transfer, mortgage registration, and closing funds.
Typical Legal Costs
- Legal Fees: $1,000 - $1,800
- Disbursements: $400 - $600
- Total: $1,500 - $2,500
Disbursements Include
- Title search
- Registration fees
- Couriers and copies
- Software fees
- Executions search
Title Insurance
Title insurance protects against title defects, fraud, and survey issues. Virtually all lenders require it.
- Cost: $250 - $500 (one-time premium)
- Coverage: Purchase price, as long as you own
Title insurance has largely replaced surveys for residential purchases, saving buyers $1,000+ while providing broader protection.
Home Insurance
Lenders require proof of home insurance before closing.
- Annual Cost: $1,200 - $2,500
- Required at Closing: First year premium or proof of coverage
Shop multiple insurers. Bundling with auto insurance often provides discounts.
Property Tax and Utility Adjustments
At closing, sellers are credited for prepaid property taxes and utilities:
- Property Tax: Prorated from closing date to end of year
- Water: Any prepaid balance
- Fuel Oil: Value of oil in tank (if applicable)
These adjustments increase your closing funds but represent prepayments you'd make anyway.
CMHC Insurance Premium
If your down payment is less than 20%, mortgage default insurance is required:
- 5% - 9.99% down: 4.00% of mortgage
- 10% - 14.99% down: 3.10% of mortgage
- 15% - 19.99% down: 2.80% of mortgage
Example
$700,000 purchase with 10% down:
- Mortgage: $630,000
- CMHC Premium: $19,530
- Total Mortgage: $649,530
Premium is added to mortgage, not paid at closing (though it does affect payments).
Additional Potential Costs
Home Inspection
- Cost: $400 - $600
- When: During conditional period
Appraisal
- Cost: $300 - $500
- When: Required by some lenders
Status Certificate (Condos)
- Cost: $100 - $150
- When: Required for condo purchases
Moving Costs
- Cost: $500 - $3,000+
- Variables: Distance, volume, services needed
Complete Closing Cost Summary
For a $700,000 Toronto home purchase (first-time buyer, 10% down):
| Item | Cost |
|---|---|
| Land Transfer Tax (net of rebates) | $14,475 |
| Legal Fees & Disbursements | $2,000 |
| Title Insurance | $350 |
| Home Insurance (first year) | $1,500 |
| Home Inspection | $500 |
| Moving Costs | $1,500 |
| Total Closing Costs | $20,325 |
Total Cash Needed: Down payment ($70,000) + Closing costs ($20,325) = $90,325
Planning Your Budget
To avoid surprises:
- Get a detailed closing cost estimate from your realtor
- Your lawyer will provide a statement of adjustments before closing
- Have additional buffer (5-10%) for unexpected costs
- Don't drain all savings - keep reserves for immediate repairs/purchases
Contact us for a personalized closing cost estimate based on your specific situation and target price range.
