Selling property in Ontario means more than accepting an offer and handing over the keys. Once you sign the Agreement of Purchase and Sale, a legal process begins that transfers ownership through Ontario’s electronic land registration system, pays off your mortgage from the proceeds, settles the financial adjustments between you and the buyer, and reports the sale to the Canada Revenue Agency.
This guide walks you through that process the way we explain it to clients across the desk. You will learn what your real estate lawyer actually does when you sell, what selling costs in Ontario, which taxes apply and which do not, the rules that catch non resident sellers and condo sellers, and the mistakes we see cost sellers the most.
What is involved in selling a property in Ontario?
Selling a home in Ontario follows a predictable path. You prepare and list the property, accept an offer, satisfy any conditions in the agreement, and then close. The closing is the legal part. In Ontario the transfer of ownership runs through Teraview, the province’s electronic land registration system, and only a licensed lawyer can register it. That is why you need a real estate lawyer to complete the sale even when everything else goes smoothly.
Your agreement with the buyer sets the framework. The standard residential contract is the Agreement of Purchase and Sale, often the form published by the Ontario Real Estate Association. It fixes the price, the closing date, the deposit, the conditions, and what stays with the house. Once both sides sign and any conditions are waived, the deal is firm and the legal work begins in earnest.
From there your lawyer runs the file to closing. The buyer’s lawyer searches title and raises questions. Your lawyer answers them, clears anything registered against the property, prepares the documents that transfer ownership, and works out the money. On closing day the lawyers exchange documents and funds, register the transfer, and you receive your net proceeds.
What does a real estate lawyer do when you sell your home?
Many sellers picture the lawyer as someone who shows up on closing day to witness signatures. The real work happens in the weeks before. Your lawyer carries out several tasks once your deal is firm.
- Review your Agreement of Purchase and Sale, confirm the closing date, and flag anything that affects you, such as conditions, included chattels, or rental items like a hot water tank.
- Order a mortgage payout statement from your lender so the exact amount owing on closing day is known.
- Answer the requisitions the buyer’s lawyer raises on title by the requisition date set in the agreement, and clear any mortgages, liens, or executions registered against the property.
- Prepare the transfer, the statement of adjustments, and the rest of the closing documents for your signature.
- Calculate the adjustments, which divide property taxes, utilities, condo fees, and any prepaid costs fairly between you and the buyer as of the closing date.
- Complete the closing, which means exchanging documents and funds with the buyer’s lawyer, registering the transfer electronically, paying off your mortgage, paying the real estate commission, and sending you the balance.
We usually open the file as soon as the deal is firm. Leaving it to the final week is the single most common way sellers create stress for themselves, because a payout statement, a status certificate, or a title problem can each take days to resolve.
| Stage | What happens |
|---|---|
| When your deal goes firm | We open the file, review the agreement, and request your mortgage payout statement |
| One to two weeks before closing | We respond to the buyer lawyer’s requisitions, clear title, and prepare your documents |
| A few days before closing | You sign the transfer and closing documents, in person or virtually |
| Closing day | We exchange funds and documents, register the transfer, pay your mortgage, and release your net proceeds |
| After closing | Your lender registers the discharge of your mortgage, usually within one to two months |
How much does it cost to sell a property in Ontario?
Selling costs less than buying because you are not paying land transfer tax or running a full set of purchase searches. Your main costs are legal fees, the real estate commission, your mortgage payout, and a few disbursements.
Legal fees for a straightforward residential sale in Ontario commonly run between 1,000 and 1,500 dollars plus HST at our firm, before disbursements, with more complex files costing more. We quote a fixed fee in writing so you know the number before you commit. These figures are current as of 2026 and vary with the property and the work involved, so ask any firm for the quote in writing and confirm before you rely on it.
| Cost | What to expect |
|---|---|
| Legal fees | Commonly 1,000 to 1,500 dollars plus HST at our firm for a standard residential sale, quoted as a fixed fee |
| Disbursements | Registration, software, and administrative charges your lawyer pays for you, usually a modest amount |
| Mortgage discharge fee | Charged by your lender to close out the mortgage, often a few hundred dollars |
| Real estate commission | Paid to the brokerages from your proceeds, negotiable and set in your listing agreement, commonly a percentage of the sale price plus HST |
| Mortgage prepayment penalty | Possible if you break a closed fixed rate mortgage early, so ask your lender before you set a firm closing date |
One cost that surprises sellers is the mortgage prepayment penalty. If you break a closed fixed rate mortgage before its term ends, your lender can charge a penalty that runs into thousands of dollars on a large balance. Call your lender for the exact figure before you set a firm closing date.
Do sellers pay land transfer tax or HST in Ontario?
No. In Ontario the buyer pays land transfer tax, not the seller. If the property is in Toronto, the buyer also pays the municipal land transfer tax. As the seller, this is the buyer’s cost, and you can take it off your worry list.
HST is a different question and the answer depends on what you are selling. A resale of used residential housing, which covers most homeowners selling the place they lived in, is generally exempt from HST. New or substantially renovated homes and most commercial or investment properties are a different story and can attract HST. If you are selling a property you used in a business, a commercial unit, or a newly built or heavily renovated home, get tax advice before closing because the HST can be significant.
What taxes do you pay when you sell a home in Ontario?
For most homeowners the big tax question is capital gains, and the answer turns on whether the property was your principal residence. If the home was your principal residence for every year you owned it, the principal residence exemption generally shelters the entire gain from tax. You walk away owing nothing on the increase in value.
There is a catch that trips up honest sellers every year. Since 2016 the Canada Revenue Agency requires you to report the sale of your principal residence on your tax return, even when the full gain is exempt and you owe nothing. You report it on Schedule 3, and you file Form T2091 if the property was not your principal residence for every year you owned it. Skip the reporting and the CRA can charge a late designation penalty of up to 8,000 dollars and, in a worse case, deny the exemption. The CRA explains the rule on its reporting the sale of your principal residence page.
If the property was not always your home, part of the gain may be taxable. A rental property, a cottage, or a second home that you did not designate as your principal residence can produce a taxable capital gain. The capital gains inclusion rate remains at 50 percent. A proposed increase to two thirds was cancelled, so half of your gain is included in income at the current rate.
Selling quickly carries its own tax rule. Under the federal property flipping rule, if you sell a residential property you owned for less than 365 days, the profit is generally taxed as business income, which is fully taxable, and the principal residence exemption does not apply. Certain life events, such as a death, a separation, or a job relocation, can take you out of the rule. If you bought recently and are selling soon, talk to us before you list because the tax treatment changes the math.
What do non resident sellers need to know about the section 116 clearance certificate?
If you are a non resident of Canada for tax purposes when you sell Ontario real estate, one rule shapes your entire closing. Section 116 of the Income Tax Act requires you to obtain a clearance certificate, called a Certificate of Compliance, from the Canada Revenue Agency. Until you do, the buyer’s lawyer must hold back a large share of your sale proceeds. The CRA sets out the process for disposing of certain Canadian property.
Here is how it works in practice. You apply to the CRA using Form T2062, and Form T2062A for certain depreciable property. If you do not notify the CRA before the sale, you must give notice within 10 days of the disposition, and late notice can bring a penalty. Until the certificate issues, the buyer’s lawyer withholds 25 percent of the gross sale price in trust, and 50 percent for some property types. Once the CRA issues the certificate, the holdback drops to 25 percent of the gain rather than the full price, and the balance is released to you.
The part that catches sellers off guard is timing. The CRA does not issue these certificates overnight. Processing commonly takes several weeks to a few months, and sometimes longer. During that time a quarter of your sale price sits in trust. We tell non resident clients to start the section 116 application as early as possible, ideally well before closing, so the holdback is released sooner. If you are selling from outside Canada, plan for this from day one.
| Question | Resident seller | Non resident seller |
|---|---|---|
| Clearance certificate needed | No | Yes, under section 116 of the Income Tax Act |
| Holdback from your proceeds | None | 25 percent of the sale price until the certificate issues, 50 percent for some property |
| Main CRA form | Schedule 3 with your return | Form T2062, plus your return |
| Biggest timing risk | Reporting the sale on time | Waiting weeks or months for the certificate before funds release |
Do you need a status certificate to sell a condo in Ontario?
If you are selling a condominium, the status certificate matters to your deal even though the buyer usually orders it. Almost every condo offer is conditional on the buyer’s lawyer reviewing this document, which sets out the corporation’s finances, the reserve fund, any special assessments, lawsuits, and the rules, along with whether any common expenses are owing on your unit. The Condominium Authority of Ontario publishes the standard form.
Under the Condominium Act, 1998, the condo corporation must deliver the status certificate within 10 days of a proper written request and payment, and the fee is capped at 100 dollars including HST. That 10 day window matters. The building has a clear deadline once the certificate is requested, but the buyer still needs time to review it before waiving conditions. Clear any arrears on your unit before you list, because an outstanding balance shows up in the certificate and can scare off a buyer or hold up the deal.
What mistakes do sellers make most often, and what do they cost?
In our practice the sellers who run into trouble are rarely the ones who hit a legal problem they could not have seen. They are the ones who left something to the last week. These are the mistakes we see most often, and what each one costs.
- Treating the sale as tax free and not reporting it. Even a fully exempt principal residence sale must be reported since 2016. Miss it and you risk a penalty of up to 8,000 dollars and a denied exemption.
- Hiding a known latent defect. You must disclose latent defects you know about that make the home dangerous or unfit to live in. Conceal one and you invite a lawsuit after closing, long after you thought the deal was done.
- Non resident sellers not planning for the section 116 holdback. They expect full proceeds on closing and are stunned when a quarter of the price is held for months.
- Forgetting a second charge or line of credit on title. A home equity line of credit, a second mortgage, or an old lien must be cleared on closing. Finding it on closing day delays your funds.
- Ordering the condo status certificate too late, or ignoring arrears that the certificate will reveal.
- Signing the listing agreement and the offer without checking that the closing date lines up with the purchase of your next home. A mismatch can leave you owning two homes or none.
Start the legal side the day your deal goes firm, not the week before closing. The sellers who run into trouble are typically the ones who waited.
Demet Altunbulakli, Founding Lawyer, Insight Law Professional Corporation
Frequently asked questions about selling property in Ontario
Do I need a lawyer to sell my house in Ontario?
Yes. In Ontario the transfer of ownership is registered electronically through Teraview, and only a licensed lawyer can complete that registration. Your lawyer also discharges your mortgage, prepares the closing documents, handles the adjustments, and releases your net proceeds. You cannot register the sale yourself.
How long does it take to close a property sale in Ontario?
The time from a firm deal to closing is whatever you and the buyer agree in the Agreement of Purchase and Sale, commonly 30 to 90 days. The legal work runs alongside that period. Non resident sales take longer in practice because the section 116 clearance certificate can take weeks or months to come back from the CRA.
Do I pay capital gains tax when I sell my home?
If the home was your principal residence for every year you owned it, the principal residence exemption generally shelters the gain and you owe no capital gains tax. You still have to report the sale on your tax return. A rental property, a cottage, or a second home can trigger tax on part of the gain, so the answer depends on how you used the property.
Who pays the real estate commission when a home sells?
The seller usually pays the commission out of the sale proceeds on closing. The amount is negotiable and you set it in your listing agreement with the brokerage. The buyer does not pay it directly.
What happens to my mortgage when I sell?
Your lawyer requests a payout statement from your lender and pays the mortgage in full from the sale proceeds on closing. Your lender then registers the discharge, usually within one to two months. Watch for a prepayment penalty if you are breaking a closed fixed rate mortgage early.
Can I sell my Ontario property if I live outside Canada?
Yes, but section 116 of the Income Tax Act applies to non resident sellers. Expect the buyer’s lawyer to hold back 25 percent of the sale price in trust until the CRA issues a clearance certificate. Start the application early so the holdback is released as soon as possible.
The information provided above is of a general nature and should not be considered legal advice. Every transaction or circumstance is unique, and obtaining specific legal advice is necessary to address your particular requirements. Therefore, if you have any legal questions, it is recommended that you consult with a lawyer.
