How real estate commission works in the US and Canada
Real estate commission is a fee for selling or buying a property, set as a percentage of the sale price or a flat amount. It's negotiable, and it's written into the listing agreement between the seller and the listing brokerage, and into the buyer agreement on the buying side.
United States. Since August 17, 2024, under the NAR settlement, offers of compensation to buyers' agents can't be made through the MLS, and buyers sign a written agreement with their agent before touring homes. The buyer's agent may be paid by the buyer, by the seller as a concession, or by the listing brokerage, as agreed. Most states don't tax commission, so the calculator starts the US tax field at 0%. Hawaii (general excise tax), New Mexico (gross receipts tax) and South Dakota (sales tax) are exceptions: enter your rate if it applies.
Canada. Commission is a taxable service, so GST or HST is added to it: 13% HST in Ontario, 14% in Nova Scotia since April 1, 2025, 15% in New Brunswick, Newfoundland and Labrador and Prince Edward Island, GST plus QST in Quebec, and 5% GST in the western provinces and territories, with Saskatchewan adding its 6% PST on most resale commission. In British Columbia and Alberta, many listings use a tiered schedule: a higher rate on the first $100,000 of the price and a lower rate on the rest. Saskatchewan listings often use three bands, for example 6% on the first $100,000, 4% on the next $100,000 and 2% on the rest. Ontario listings usually use one percentage on the whole price.
Worked examples
| Example | Commission | Tax | Total |
|---|---|---|---|
| Ontario, $800,000 sale, 2.5% + 2.5% | $40,000.00 | HST 13%: $5,200.00 | $45,200.00 |
| British Columbia, $1,000,000 sale, 7% on the first $100,000 + 2.5% on the rest | $29,500.00 | GST 5%: $1,475.00 | $30,975.00 |
Formulas: commission = sale price × listing % + sale price × buyer %. Tiered: first $100,000 × first rate + (price − $100,000) × second rate. Tax = commission × tax rate. Net after commission = price − commission − tax.
| GCI | $12,500.00 |
|---|---|
| − Referral fee (25%) | $3,125.00 |
| After referral | $9,375.00 |
| − Franchise fee (6%) | $562.50 |
| − Brokerage share (30%) | $2,643.75 |
| − Transaction fee | $395.00 |
| Take-home before income tax | $5,773.75 |
What an agent actually keeps
The commission on a sale isn't the agent's pay. An agent's side of the commission is their gross commission income (GCI). From it come any referral fee owed to the agent who sent the client, a franchise or royalty fee if the brokerage belongs to a franchise, and the brokerage's share under the agent's split. Many brokerages cap their share each year: once an agent has paid the cap, they keep their full split for the rest of the year. Transaction, desk and errors-and-omissions fees come off last. What's left is take-home before income tax and the agent's own business costs. In Canada, the GST or HST collected on commission isn't income at all; it goes to the government.
Questions
Is real estate commission negotiable?
Yes. Commission is agreed between the seller and the listing brokerage in the listing agreement, and between a buyer and their agent in the buyer agreement. No law sets the rate in the US or Canada.
Who pays the buyer's agent in the US now?
Since August 17, 2024, under the NAR settlement, offers of buyer-agent pay can't be made through the MLS, and buyers sign a written agreement with their agent before touring homes. The buyer's agent can still be paid by the buyer, by the seller as a concession, or by the listing brokerage, as negotiated.
Is HST charged on real estate commission in Ontario?
Yes. Commission is a taxable service, so 13% HST is charged on it in Ontario. The calculator adds it automatically when you choose Ontario.
How is commission calculated in BC and Alberta?
Many listings in British Columbia and Alberta use a tiered schedule: one rate on the first $100,000 of the price and a lower rate on the rest. The calculator's tiered option uses 7% and 2.5% (BC) or 7% and 3% (Alberta) as editable examples; your listing agreement sets the real numbers.
What's the difference between GCI and take-home pay?
GCI (gross commission income) is your side's commission before anything comes off. Take-home is what's left after referral fees, franchise fees, your brokerage's share and transaction fees, and it's still before income tax and your own business expenses.
Does this calculator store my numbers?
No. It runs entirely in your browser. Nothing you type is sent to us or anyone else; the numbers only go into the page address so you can share a filled-in link if you want to.