Pre-construction closing costs in Ontario: the complete list

Budget 3–6% beyond the purchase price

Pre-construction closing costs are higher and less predictable than resale. As a rule of thumb, budget 3–6% of the purchase price on top of your deposit, more in the City of Toronto where municipal land transfer tax doubles the provincial charge.

Development charges and levies — cap them

Builders pass municipal development charges, education levies and park levies on to buyers at closing. Uncapped, these can run tens of thousands of dollars. The single most valuable clause your lawyer can negotiate during the cooling-off period is a cap on development charges and levies — commonly $10,000–$20,000 for condos.

Land transfer tax and HST

Ontario land transfer tax applies on closing, and Toronto purchases pay a second municipal land transfer tax of roughly the same amount. First-time buyers can get rebates of up to $4,000 provincially and $4,475 in Toronto.

New homes are subject to HST, but if the home will be your principal residence the federal and Ontario new-housing rebates are usually assigned to the builder and baked into the advertised price. Investors must pay the HST rebate amount (often $24,000–$30,000) at closing and claim the New Residential Rental Property Rebate back afterwards by signing a one-year lease.

Interim occupancy and other fees

Condos have an interim occupancy period between move-in and final registration, during which you pay the builder a monthly fee (interest on the unpaid balance, estimated taxes and maintenance) — this is the often-misunderstood 'phantom rent'. It is not applied to your purchase price.

Also budget for: legal fees ($1,800–$3,000), Tarion enrolment fee, utility meter installation and connection charges, mortgage default insurance if under 20% down at closing, and two months of property tax and common-expense reserve adjustments.