When you compare the differences between buying a new condo and a resale condo, you’ll quickly see that you need to consider a lot more than just the pre-construction financing options. On top of that, you’ll also have to pay a land transfer tax, legal fees, a home inspection fee and more. Some closing costs are specific to new developments and our goal with this post is to leave you prepared for all of them, so you’re not surprised by any on closing day. Here are some of the closing costs you can expect to pay on a new condo in Toronto:
Even though you’re buying a new condo, that doesn’t mean you should skip the home inspection. Your builder will provide you with a walkthrough before you take occupancy, but a Toronto home inspector can sometimes find things that you may not even know to look for. For example, your appliances may not be hooked up, hot and cold water lines could accidentally be switched, or sometimes an electrical outlet or two may not work. An experienced home inspector could charge up to $500 for an inspection, but this fee could save you time and money down the line.
You might think that because your condo is brand new and comes with a number of warranties that you may not need to work with a real estate lawyer. Well, that’s not exactly what a real estate lawyer does. A Toronto real estate lawyer will oversee the entire transaction, ensuring that your rights are protected and that you understand each and every part of the agreement you are signing. Your lawyer will register all documents in your name, get title insurance in place, and facilitate the financial transaction on closing day. You should expect to pay at least $1,500 in legal fees and disbursements.
Land Transfer Tax
Whenever you buy property in Toronto, you are subject to not one but two land transfer taxes. First, you’ll have to pay Ontario’s land transfer tax. Then Toronto has it’s own municipal land transfer tax, which you will also have to pay for. Your land transfer taxes are calculated as a percentage of your new condo’s purchase price and can add up to tens of thousands of dollars. Fortunately, first-time homebuyers may be eligible for a full or partial refund of the tax.
In Toronto, not only do you have to pay HST on services, such as your legal fees, you’ll also have to pay HST on the purchase price of your new condo. HST is 13 per cent in Ontario, so you can see how quickly this amount can add up. For example, if you buy a new condo for $425,000, you’ll have to pay an additional $55,250 for HST ($425,000 x 0.13 = $55,250). Before you worry about having to save up that amount on top of what you’re paying throughout construction, check with your builder to see if HST is included in the purchase price.
New Home Warranty Enrolment Fees
When you are buying a new condo, your occupancy date likely isn’t for several months after the date you decide to purchase. A new home warranty can protect you between the time you put down your first deposit and your occupancy date. In Ontario, special insurance providers offer warranties on new homes. The enrolment fee ($500-1,000) protects you from having to pay for any repairs, should your builder fail to build something to standard. Some builders will offer to include the enrolment fee in your purchase price, but many others don’t, so it’s a good idea to do your research before you move ahead.
These are just some of the closing costs you can expect to be faced with, when you start looking at new condos in Toronto, but there are still others to consider, including development and educational levies, utility hook-up fees and more. No matter what closing costs you have to pay for, it’s important to do your due diligence and find out which ones your builder is including in the purchase price of your unit. Once you know that, you can begin to calculate what your final costs could be on closing day and budget for them ahead of time.