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Additional costs for home buyers

Region: Ontario Answer # 395

When purchasing a new home, in addition to the purchase price, legal fees and disbursements, you will normally incur a number of additional expenses, including land transfer tax, the Harmonized Sales Tax (HST), and adjustments. Real estate matters involve large sums of money and complicated legal issues. To get help, ask a lawyer now.

Land Transfer Tax

One of the largest additional expenses when purchasing a property in Ontario is the provincial land transfer tax. The land transfer tax payable is normally based on a percentage of the amount paid for the land, in addition to the amount remaining on any mortgage or debt assumed as part of the arrangement to buy the land.

The Ontario land transfer tax percentages range from 0.5% to 2.5% of the purchase price. This is a graduated tax, which means that the lowest percentage is used for amounts up-to a maximum, and then the next tax percentage is used, and so on.

See topic 396 Land Transfer Tax for details.

HST on the purchase price

In addition, if you buy a new home, HST will be payable. HST does not, however, normally apply to the purchase price of used homes. HST is 13% of the purchase price. Many builders include the HST in the purchase price, while others charge the HST in addition to the purchase price. If you are buying a newly built home, you should make sure you know what the total purchase price is including HST.

HST on transaction costs

Even if HST is not payable on the purchase price of your home, HST is payable on most transaction costs, such as legal fees and disbursements, real estate commissions, appraisals, home inspections, and survey fees. HST is not payable on land transfer tax or mortgage insurance fees.

HST rebate for new home purchase

The purchase price of resale homes are exempt from the HST, while the purchase price of new homes are subject to HST. If you are a purchaser of a home, your property may qualify for a rebate of a portion of the HST paid. You do not have to be a first-time homeowner to qualify.

The property will qualify if you:

  • buy a new home, or a substantially renovated home, from the builder
  • buy a newly constructed house from a builder, where you lease the land from the builder under the same agreement to buy the house
  • buy a mobile home (or a floating home, not a house-boat) from a builder
  • buy a share interest in a newly-built, co-operative housing corporation
  • build, or substantially renovate your home, or construct an addition
  • rebuild your home due to fire

Buyers may also be eligible for further provincial and federal GST/HST rebates on various types of new home purchases. Visit canada.ca for more information.

Non-resident Speculation Tax (NRST)

In 2017, the Ontario Government introduced the Non-resident Speculation Tax (NRST). The NRST is a 15% tax on the price of homes in the Golden Greater Horseshoe (GGH) bought by people who aren’t citizens or permanent residents of Canada or by non-Canadian corporations. This new tax is in addition to Ontario’s land transfer tax payable, and was effective as of April 21, 2017. For more information, visit #0450 Foreign home buyers.


On the closing date of your purchase or sale, the amount of money due on closing will be “adjusted” to reflect the expenses of the property that should be paid by the seller and those that should be paid by the purchaser for the number of days of the year each of the parties will own the property. For example, the purchaser will be required to reimburse the seller if the seller has prepaid any property taxes. If a home is heated by an oil furnace, the seller will usually fill the tank before closing and the purchaser will pay the seller the cost of the full tank.

In addition to taxes and adjustments, purchasers are also responsible for a number of general administrative transaction costs. These include expenses such as legal fees, document searches and registration costs. Purchasers may also need to pay for mortgage insurance, title insurance, and possibly for a survey of the property if the seller is not able to provide them with one.

How to determine your total expenses

It is very important to know in advance how much money you will actually receive from the sale of a property and how much you will need for your purchase. Your lawyer will be able to calculate most of these costs for you and provide you with an estimate of these total amounts.

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Get legal help

Real estate matters involve large sums of money and complicated legal issues. To get help, ask a lawyer now.

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