Buying your first home is a major milestone — and while saving for your down payment is likely top of mind, it’s important to plan for additional expenses known as closing costs. These costs can add up quickly and often catch first-time buyers off guard, but being prepared can help you avoid surprises on closing day.
In this post, we’ll walk you through the typical closing costs involved in an Ontario real estate transaction, including legal fees, title insurance, and out-of-pocket expenses. Land transfer tax is a separate line item and is discussed in detail below.
How much should you budget for closing costs?
While closing costs can vary depending on the purchase price of your property and the specific services you require, a general rule of thumb is to budget around $5,000.00. Once you have a firm offer, contact us and we will give you an accurate closing cost breakdown.
What is included in closing costs?
When you purchase a property, your real estate lawyer will guide you through the process and handle several key tasks, including:
- Reviewing the agreement of purchase and sale and overseeing the closing process to ensure it goes off without a hitch.
- Conducting a title search
- A title search ensures there are no hindrances for a new owner taking possession and ensuring no liens on the property title for taxes or utilities. The price for this varies property to property but is included in our cost estimates.
- You can learn more about title searches here.
- A provincial tax based on the purchase price of the property called land transfer tax.
- Land transfer tax costs:
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- 0.5% on the first $55,000 of the purchase price
- 1% on the portion from $55,000 to $250,000
- 1.5% on the portion from $250,000 to $400,000
- 2% on the portion from $400,000 to $2,000,000
- …and so on.
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- For an easy way to calculate this tax, check out this Land Transfer Tax Calculator from RateHub.
First-time homebuyer rebate
If you’re a first-time homebuyer, you could qualify for a rebate of up to $4,000 on your Ontario land transfer tax. This rebate can significantly lower — or even completely cover — your land transfer tax, depending on your home’s price.
To be eligible, you must:
- Have never owned property anywhere in the world.
- If buying with a partner, both must be first-time buyers.
You can read more about the land transfer tax rebate here.
Working with the right real estate team
At McMurter & Associates, we believe that transparency matters. From your very first conversation with us, you’ll receive a clear and accurate breakdown of your legal fees. We pride ourselves on making sure you understand your costs upfront — no hidden fees, no last-minute surprises.
Beyond legal fees, your real estate lawyer and agent should always walk you through the full scope of closing costs, so you know exactly what to expect before you take possession of your new home.
McMurter & Associates has you covered.
McMurter & Associates has been providing real estate legal services for over 30 years in the Durham Region. If you have any questions about your real estate transaction, we are available Monday to Friday, 9 am until 5 pm. Email: info@mcmurter Phone: 905-666-9200.