Hidden Costs of Buying & Selling: What You Need to Know Before Your Next Move
When buying or selling a home in Canada, most people focus on the listing price, mortgage payments, or the final sale amount. But many hidden costs can take both buyers and sellers by surprise. If you’re planning a move in 2025, understanding these expenses can help you budget properly and avoid last-minute financial stress.
For Buyers: Unexpected Costs When Purchasing a Home
Buying a home isn’t just about the down payment. There are several additional costs that buyers must account for:
1. Land Transfer Tax (LTT) – A Big Expense at Closing
In most provinces, buyers must pay a Land Transfer Tax when purchasing a property. This is based on the purchase price and varies by province and municipality.
📌 Ontario Example:
- On a $1,000,000 home in Ontario, you’d pay $16,475 in Land Transfer Tax.
- If buying in Toronto, add an extra $16,475 for the municipal LTT.
💡 First-time buyers in Ontario, British Columbia, and other provinces may qualify for rebates to reduce this cost.
2. Legal Fees & Disbursements
Hiring a real estate lawyer is essential to review contracts, conduct a title search, and handle the transfer of ownership.
💰 Typical cost: $1,500 – $3,000
3. Home Inspection
A home inspection is crucial to uncover potential issues before closing.
💰 Typical cost: $400 – $800
4. Mortgage Insurance (If Your Down Payment is Less Than 20%)
If you’re putting down less than 20%, you must pay for CMHC insurance (or another insurer like Sagen or Canada Guaranty). This cost is added to your mortgage.
📌 Example: On a $700,000 home with a 10% down payment, CMHC fees would be $19,740.
5. Property Appraisal
Lenders may require an appraisal to confirm the property’s market value before approving a mortgage.
💰 Typical cost: $300 – $600
6. Adjustments for Property Taxes & Utilities
If the seller has prepaid property taxes or utilities, you must reimburse them for any amounts that cover after your possession date.
💰 Typical cost: Varies by city, but expect $1,000 – $3,000 in adjustments.
7. Moving Costs
Whether hiring professional movers or renting a truck, moving can be more expensive than expected.
💰 Typical cost: $500 – $3,000+ (depending on distance and moving company).
For Sellers: The True Cost of Selling a Home
Selling your home isn’t free. Here’s what to expect:
1. Realtor Commissions
In Canada, sellers typically pay 5% (plus HST in some provinces) in commission, which is split between the buyer’s and seller’s agents.
📌 Example: On a $1,000,000 home in Ontario, commission fees could be $56,500 after HST.
2. Legal Fees & Mortgage Discharge Fees
Your lawyer will handle the closing paperwork, including the mortgage discharge. If you’re paying off your mortgage early, your lender may also charge a penalty.
💰 Typical costs:
- Legal fees: $1,500 – $3,000
- Mortgage discharge fee: $200 – $600
- Prepayment penalty: Three months’ interest or an interest rate differential (IRD), which can be thousands of dollars
3. Home Staging & Repairs
Staging and minor repairs help maximize your sale price.
💰 Typical costs:
- Staging: $2,000 – $5,000
- Paint & small repairs: $1,000 – $5,000
4. Capital Gains Tax (For Investment Properties & Second Homes)
If you’re selling a rental or vacation property, any profit made is subject to capital gains tax (50% of the gain is taxable).
📌 Example: If you bought a cottage for $300,000 and sell it for $600,000, your taxable gain is $150,000, meaning $75,000 is added to your income.
💡 Your primary residence is exempt from capital gains tax!
5. Moving Costs & Utilities Transfer
Just like buyers, sellers also need to budget for moving costs and final utility bills.
💰 Typical costs: $500 – $3,000
How to Reduce These Costs & Make Smart Financial Decisions
💡 For Buyers:
✔ Apply for first-time buyer rebates (if eligible).
✔ Budget at least 1.5% – 4% of your purchase price for closing costs.
✔ Ask your lender if they’ll cover the appraisal fee.
💡 For Sellers:
✔ Negotiate commission rates where possible.
✔ Invest in high-ROI home improvements.
✔ Plan your sale timing to avoid mortgage prepayment penalties.
Thinking about selling your home? Get a FREE home evaluation & expert selling advice:
👉 Visit My Seller’s Page
Whether you’re buying or selling, understanding these hidden costs will help you budget wisely and avoid surprises. Have questions? Let’s chat!
📞 905.630.8255
📧 stephanie@therealtydeal.com
🌐 www.therealtydeal.com