When purchasing a pre-construction condo, make sure you factor in the closing costs associated with your purchase. Although the development will be ready in 3-4 years from now, you still want to make sure you factor in how much you’ll be spending on final closing. Here are some of your closing costs on a pre-construction condo:

Land Transfer Tax

Land transfer tax is what you must pay on final registration of a pre-construction condo unit. Now how much is land transfer tax? On a 700,000 condo for example, your land transfer tax will be $10,475 in Ontario. In Toronto the land transfer tax is doubled meaning you will be paying $20,950 in land transfer tax on final closing. A common question I get is are there any savings for first time buyers? The answer is YES! On a 700,000 condo for a first time home buyer, you will only be paying $6,475 in Ontario and $12,475 in Toronto.


Another important payment to factor into your closing costs is levies. Most pre-construction developments offer capped levies. You must check how much your levies are capped at, if they are capped at $7000 then factor that payment into your closing costs. This means that the developer will not be able to charge you more than $7000 in levies on final closing. You may ask, what are levies? Levies are development charges or development taxes from the municipality that are charged to the developer. They include Education Levies, Public Art Levies, Parks Levies, etc. The developer gets charged and a portion of the payments are passed onto the purchaser.

Important note: Development charges are subject to HST. So if you are paying $7k in development charges really you have to pay $7,910.


You may or may not have to pay HST. Most developers price they’re units with HST included in the price but it depends on if you are moving into the suite yourself or if you are an investor and renting it out. Now how much HST do you have to pay? This depends on the purchase price of your unit; if the purchase price is less than 350k then you should expect to pay approximately 7.8% in HST. If your purchase price is more than 450k then you should expect to pay a flat fee of $24,000. So is this money gone forever? No! You can apply to get this money back from the CRA. In most cases you will get all or a majority of funds back within 1 month of applying.

Legal Fees

You must also factor in legal fees. Make sure you are using a good lawyer and factoring in their cost in your calculations. Whether they charge $500 or $1500, make sure you factor in this extra payment and make sure you pick a lawyer who is experienced in the pre-construction field.

Tarion Warranty

Every new condo unit must be enrolled into the Tarion Warranty program and you must pay an enrolment fee. Tarion Warranty’s primary purpose is to protect consumers of new homes by making sure builders abide by the rules and provincial legislation. Enrolment fee’s will typically cost you between $1000-$1800 depending on the purchase price of the unit.

Utility Connection

For your new home, you’ll need your utility pipes, lines and meters hooked up before hand so that when you are ready to move in, these are all ready to go. There is a fee from the builder for hooking these up. Typically expect to pay around $500-2000 for utility hookups, depending on if you are charged separately for each hookup or not.

Reserve Fund

Last but not least, the Reserve Fund. This goes into the condo corporations bank account for future repairs in the building. When you buy pre-construction, you’ll need to contribute 2 months condo fees to the condo’s reserve fund (the emergency fund). This usually happens at the time of closing.

Other Miscellaneous Fees

Deposit Administration/Letter Charges, Discharge of Construction Mortgage, Site review by Tarion, Electronic Registration Fee and HST on Appliances.

All miscellaneous costs together inclusive of Reserve Fund, Utility Connection, Tarion Warranty, and all other Miscellaneous Fees can cost you about $4000-$5000 all inclusive. This is another cost you should factor into your final closing calculations.

Hope this helps with your next pre-construction purchase! We are platinum brokers with most developers in the city, if you want thousands of dollars of incentives, contact us today!

Call Us