The purchase price is just the beginning
When you see a property listed at C$600,000 in Ontario, that is not what you will actually pay. Between Land Transfer Tax, legal fees, title insurance, and other closing costs, the true cost of acquisition can add tens of thousands of dollars on top of the sticker price. And that is before you factor in the ongoing costs of holding the property.
If you are buying as an investment, these additional costs directly affect your return on investment. Getting them wrong — or worse, not accounting for them at all — can turn a profitable deal into a losing one. Here is a full breakdown of what to expect.
Land Transfer Tax (Ontario)
Ontario uses a progressive bracket system for Land Transfer Tax. The tax is calculated on the purchase price using the following rate structure:
- 0.5% on the first C$55,000
- 1.0% on C$55,001 to C$250,000
- 1.5% on C$250,001 to C$400,000
- 2.0% on C$400,001 to C$2,000,000
- 2.5% on amounts above C$2,000,000
For a C$600,000 property, this means roughly C$8,475 in provincial Land Transfer Tax alone. If the property is in Toronto, there is an additional Municipal Land Transfer Tax at similar rates, effectively doubling the bill.
Non-Resident Speculation Tax: Foreign buyers face an additional 25% surcharge on the purchase price. On a C$600,000 property, that is an extra C$150,000 — a massive cost that makes non-resident investment in Ontario extremely expensive.
Closing costs
Beyond Land Transfer Tax, expect these one-time costs at closing:
- Legal Fees: Conveyancing and title transfer handled by a real estate lawyer. Budget C$1,500–C$2,500 depending on the complexity of the transaction.
- Title Insurance: Protects against defects in title, liens, or encroachments. Typically C$300–C$500 for a residential purchase.
- Home Inspection: Not mandatory but strongly recommended, especially for investment properties. Expect C$400–C$600.
- Appraisal Fee: Required if you are financing with a mortgage. Lenders need an independent valuation, which typically costs C$300–C$500.
All in, closing costs (excluding Land Transfer Tax) typically run C$2,500–C$4,000.
Ongoing costs
These are the recurring expenses that eat into your rental yield every year:
- Property Tax: Approximately C$4,500 per year for a typical investment property. Rates vary by municipality.
- Home Insurance: Budget around C$1,800 per year for landlord insurance covering the structure, liability, and loss of rental income.
- Maintenance: A reasonable reserve is C$3,000 per year, though older properties may cost more.
- Condo Fees: If you are buying an apartment or condo, expect management fees of approximately C$650 per month (C$7,800 per year). This is a significant ongoing cost that must be factored into any condo investment analysis.
For a single-family home, ongoing costs total roughly C$9,300 per year. For a condo, add another C$7,800 on top — over C$17,000 annually before mortgage payments.
Capital gains tax
Canada uses an income inclusion model for capital gains tax. When you sell an investment property at a profit:
- 50% of the capital gain is included in your taxable income for that year.
- That inclusion is then taxed at your marginal tax rate, which ranges from 20.05% to approximately 46.16% (combined federal and Ontario provincial rates).
So if you bought at C$600,000 and sold at C$800,000, your capital gain is C$200,000. Half of that — C$100,000 — gets added to your income. At a marginal rate of around 43%, you would owe roughly C$43,000 in tax.
Primary residence exemption: If the property is your principal residence, the entire capital gain is exempt from tax. This exemption does not apply to investment properties.
When selling, the seller typically pays an agent commission of 5% plus HST (13%), legal fees of approximately C$1,500, and a mortgage discharge fee of around C$300 if there is a mortgage to clear.
What does this mean in practice?
Let’s put it together for a C$600,000 single-family investment property in Ontario with a 20% down payment:
Upfront costs:
- Down payment: C$120,000
- Land Transfer Tax: ~C$8,475
- Closing costs: ~C$3,500
- Total cash needed: ~C$131,975
Annual holding costs:
- Property Tax: C$4,500
- Insurance: C$1,800
- Maintenance: C$3,000
- Total: C$9,300/year
Mortgage (C$480,000 at 4.25% over 25 years):
- Monthly payment: approximately C$2,600
To break even on cash flow, you would need monthly rent of at least C$3,375 — and that is before vacancies, property management, or unexpected repairs.
The numbers work in some Ontario markets, but they are tight. The key is running them properly before you commit.
Run the numbers for your property
Every property is different. Use our Canadian property ROI calculator to model the full picture — purchase costs, mortgage payments, rental income, and long-term appreciation. Or read our complete guide to buying property in Canada for a deeper walkthrough of the process.