Everything You Need to Know About Closing Costs in Quebec

Buying or selling a property in Quebec involves more than just the sale price. Closing costs are an essential part of the transaction and can take buyers and sellers by surprise if they’re not prepared. These costs cover the legal, administrative, and financial obligations needed to complete the transaction and transfer ownership.

Here’s everything you need to know about closing costs in Quebec to help you navigate the process with confidence.

1. Land Transfer Tax (Welcome Tax)

The land transfer tax, commonly called the welcome tax, is one of the largest closing costs for buyers in Quebec. It is calculated based on the purchase price of the property or its municipal evaluation—whichever is higher.

Tax Rates (2024)

• 0.5% on the first $55,200
• 1.0% on the portion between $55,200 and $276,200
• 1.5% on the portion between $276,200 and $500,000
• 2.0% on the portion between $500,000 and $1,000,000
• 3.0% on the portion above $1,000,000 (in some municipalities like Montreal)

Example Calculation

For a property in Montreal with a purchase price of $600,000:

• 0.5% of $55,200 = $276
• 1.0% of ($276,200 – $55,200) = $2,210
• 1.5% of ($500,000 – $276,200) = $3,591
• 2.0% of ($600,000 – $500,000) = $2,000
  Total Welcome Tax = $8,077

To calculate your Property Transfer Tax according to your city, use our free tool: Property Transfer Tax Calculator

Did You Know!

The “Welcome Tax,” officially called the Land Transfer Tax, was introduced in Quebec in 1976 under the Municipal Aid Act to help municipalities fund public services. Its nickname, “Taxe de Bienvenue,” stems from a misattribution to Jean Bienvenue, the government minister involved in legislating the tax. While his last name translates to “welcome” in French, the tax has no connection to welcoming new homeowners.

2. Notary Fees

In Quebec, all real estate transactions must be finalized by a notary. Their role includes drafting the deed of sale, transferring funds, and registering the property.

Typical Costs

• Fees range from $1,000 to $2,000 depending on the complexity of the transaction and the notary’s experience.

Key Responsibilities of the Notary

• Verifying the legal status of the property (e.g., liens or encumbrances).
• Registering the sale and title transfer with the government.
• Adjusting property taxes, utility bills, and condo fees between the buyer and seller.

3. Adjustments for Prepaid Costs

Buyers are responsible for reimbursing the seller for any prepaid costs related to the property. These include:

Property Taxes

• If the seller has paid property taxes for the full year, the buyer reimburses the seller for the portion of the year they will own the property.

Condo Fees

• For condos, any monthly maintenance fees paid in advance by the seller must be adjusted.

Utilities

• Utilities such as electricity or heating oil that have been prepaid will be prorated and adjusted accordingly.

4. Home Inspection Fees

While not legally required, a home inspection is highly recommended for buyers and sometimes imposed by lenders. This ensures the property is in good condition and identifies potential issues.

Typical Costs

• Inspections in Quebec usually cost between $400 and $1000, depending on the size and type of property.

Who Pays?

• The buyer typically bears this cost as part of their due diligence.

5. Mortgage-Related Costs

If you’re financing the purchase with a mortgage, there are additional costs to consider:

Mortgage Insurance (CMHC Insurance)

• If your down payment is less than 20%, you’ll need mortgage insurance through the Canada Mortgage and Housing Corporation (CMHC) or a similar provider.
• The premium is added to your mortgage and is calculated as a percentage of the loan amount (ranging from 2.8% to 4.0%).

Appraisal Fees

• Lenders often require an appraisal to determine the property’s value before approving the loan.
• Costs range from $300 to $500.

Mortgage Penalties (for Sellers)

• If the seller pays off their mortgage early, a penalty may apply. This is typically three months of interest or an interest rate differential (IRD), depending on the lender’s terms.

6. Real Estate Agent Commission

If you’re selling a property, the largest closing cost is typically the commission paid to your real estate broker.

Standard Rates

• In Quebec, commissions typically range from 4% to 6% of the sale price, plus applicable taxes (GST and QST).

Why It’s Worth It

• A broker’s services include pricing, marketing, negotiation, and managing the transaction, which often results in a higher sale price that offsets the cost of commission.

7. Moving Costs

Once the transaction is finalized, moving costs are another expense to consider:

Typical Costs

• For local moves in Montreal, rates typically range from $500 to $2,000 depending on the size of the move and the distance.
• Moving during July 1 Moving Day, a peak period in Quebec, can increase costs significantly.

8. Certificate of Location

9. Taxes on New Construction

A new construction property is a real estate property that has been completely rebuilt and has never been lived in. New construction properties can include single-family homes, townhomes, condos, and other types of residential real estate.

If you’re purchasing a newly built property, additional taxes apply. 

• GST (5%) and QST (9.975%) are added to the purchase price.
• Partial rebates may be available for homes below a certain price threshold.

10. Capital Gains Tax on Non-Primary Residence Properties

Optional Costs

In addition to the mandatory closing costs, there are optional services that can add value to your transaction:

Home Staging

• Professional staging can help your property sell faster and for a higher price. Costs typically range from $1,500 to $5,000, depending on the size and scope.

Pre-Sale Inspection

• Sellers may opt for a pre-sale inspection to identify and address potential issues before listing the property. Costs range from $400 to $1,000.

Title Insurance

While not mandatory in Quebec, title insurance can protect buyers against unforeseen legal issues with the property. Costs are typically $300 to $500 for a standard policy.

Conclusion

Closing costs in Quebec are a crucial part of any real estate transaction. By understanding these costs and planning ahead, you can avoid surprises and ensure a smooth process. Whether you’re buying or selling, working with an experienced real estate broker and notary can help you navigate these expenses and maximize the value of your transaction.

If you’re ready to sell or buy in the Greater Montreal Area, contact us today for expert guidance through every step of the process!