Real estate commission in Ontario is not set by the government or by the regulator. It is a term of the listing agreement between a seller and their brokerage — negotiable, written down before the property goes to market, and paid out of the sale proceeds on closing. On top of whatever is agreed, 13% HST applies to the commission, and it applies even when the home itself is an HST-exempt resale property.
Who actually pays the commission?
In the standard Ontario arrangement the seller pays. The listing agreement sets a total commission on the sale price, the seller's lawyer pays it from the proceeds on closing, and the listing brokerage shares an agreed portion with the brokerage that brought the buyer.
Buyers do not usually write a commission cheque, though under a buyer representation agreement a buyer can agree to pay their own brokerage directly, or to top up a difference if the seller's offer of compensation is lower than agreed. Either way the money reaches an agent through their brokerage, never directly from the other side of the deal.
How much is commission in Ontario?
There is no standard rate, and quoting one as though there were is the most common error in this topic. What exists is a market: full-service listings, discount models, flat-fee arrangements and tiered structures all operate in Ontario, and what is negotiated varies by price point, by region and by how competitive the listing is.
Worked examples in this area are usually built on a total of 5% split evenly between the two brokerages, because the arithmetic is easy to follow — not because it is a rule. Here is what that example looks like on an $800,000 sale:
| Line | Amount |
|---|---|
| Sale price | $800,000 |
| Total commission at 5% | $40,000 |
| HST at 13% on the commission | $5,200 |
| Total the seller pays in commission and tax | $45,200 |
| Listing side at 2.5% | $20,000 plus $2,600 HST |
| Cooperating (buyer's) side at 2.5% | $20,000 plus $2,600 HST |
Change the percentage and every line moves. Our HST on commission calculator runs the same arithmetic for any price, any rate and any province, including the seller's net proceeds.
The tax on the commission
A real estate commission is a taxable supply of a service, so GST/HST applies to it — 13% in Ontario. Two points trip people up:
- An exempt home does not make the commission exempt. Used residential housing is generally exempt from GST/HST, which is why no tax appears on the purchase price of a typical resale home. The commission is a separate service, and it is taxable regardless.
- The rate follows the property's province, not the brokerage's. Because the service relates to real property, the place-of-supply rule ties the tax to where the property sits.
Our guide to HST on real estate commission in Ontario works through the invoice, the split between brokerages and what the seller actually nets.
If you are the agent, commission is business income
From the other side of the transaction, the rules change character. Commission paid to a salesperson through their brokerage is self-employment income, not employment income, and that brings three obligations with it.
- GST/HST registration once your taxable revenue passes $30,000 in any four consecutive calendar quarters. After that you charge tax on your commission, file returns, and claim input tax credits on what you spend to earn it.
- Income tax on the net figure, after the costs of doing business — brokerage fees and desk fees, advertising, vehicle costs within the 2026 vehicle limits, licensing, board and association dues, and a home office if you have one.
- Instalments, once the tax owing at year end gets large enough that the CRA expects it during the year rather than in one April payment.
Agents at a certain level of retained earnings also look at incorporating through a Personal Real Estate Corporation; our PREC guide for Ontario agents covers who qualifies and what the corporation actually defers.
What a seller should check before signing
- The total commission and how it splits between the two brokerages — both belong in the listing agreement.
- Whether the figure quoted includes HST or is before it; $40,000 and $45,200 are not the same conversation.
- The length of the listing period and any holdover clause, which can keep commission payable after the listing ends if the buyer came from it.
- What happens if the property does not sell, or if the seller cancels early.
Frequently Asked Questions
Who pays the real estate commission in Ontario, the buyer or the seller?
Normally the seller, out of the proceeds on closing: the listing agreement sets a total, and the listing brokerage shares a portion with the brokerage representing the buyer. A buyer can agree to pay their own brokerage directly under a buyer representation agreement, but that is the exception rather than the default.
What is the real estate commission rate in Ontario?
There is no set rate. Commission is negotiated between the seller and the listing brokerage and recorded in the listing agreement; full-service, discount and flat-fee models all exist in Ontario. Examples are often built on 5% split evenly because the arithmetic is simple, not because it is a standard.
Is there HST on real estate commission in Ontario?
Yes — 13%. A commission is a taxable service, so HST is charged on it on top of the agreed amount. On a $40,000 commission that is $5,200, for $45,200 in total.
Is there HST on a resale home in Ontario?
Generally not on the price of the home itself: used residential housing is exempt from GST/HST. New builds are a different matter and are taxable, with rebates available in some cases. The commission on either sale is taxable regardless.
Can a real estate agent deduct the commission split paid to their brokerage?
Yes. Amounts retained by the brokerage out of a commission are a cost of earning that income and are deductible, as are desk fees, advertising, licensing, board dues and the business share of vehicle costs. The deduction is claimed on the business statement filed with the return, which is also why those amounts need to be tracked through the year rather than reconstructed at tax time.
If you sell real estate in Ontario and your books stop at the brokerage statement, our bookkeeping service for realtors picks it up from there — commissions, HST filing and the year-end — or book a free consultation and we will look at your current setup first.