Wondering how much you’ll pay for condo closing costs? Find out how the fees break down…
Every so often, I hear about somebody who purchased a condo and was caught completely off guard by the closing costs. Unfortunately, these stories can create hesitation for first-time buyers. The good news? Condo developers and corporations aren’t out to get you. Closing costs are a necessary part of the buying process, and understanding them can help you budget effectively for the future—and feel good about your purchase.
If you’re thinking about buying a condo, here’s a breakdown of the closing costs you can expect to pay…
Initial Condo Closing Costs
Your deposit
You’ll include your deposit when you make your offer to purchase a condo. For resale units, you’ll usually pay around 5 percent. For new condos, the figure is often as high as 20 percent (usually in instalments). The nice thing about pre-construction is that your deposit structure is more flexible, which means you often have more time to save.
Home inspection and appraisal
If you require mortgage financing to make your purchase, your lender will usually require an appraisal before they provide it. The cost for an appraisal is typically between $300 and $400, and often your lender will cover it. Inspections for resale condos generally also fall within this price range. Many buyers opt not to have their units inspected—it really depends on your circumstances. If you’re purchasing a brand new condo, you’ll take part in a pre-delivery inspection. You can find a checklist of things to look for during this process here.
At closing
The remainder of your purchase price
Upon closing, you’ll pay for your condo in full. Since you’ve already paid your deposit, this amount will be subtracted for the overall price.
Legal fees & title insurance
To complete your purchase, you’ll need a lawyer to help you dot your i’s and cross your t’s. Legal fees vary depending on the professional you work with, but you can usually expect to pay anywhere between $1000 and $3000. Title insurance may or may not be included. This type of insurance provides coverage for a wide variety of issues you could encounter (such as utilities used by a previous tenant who left them unpaid).
Provincial land transfer tax
Every homebuyer in Ontario has to pay the provincial land transfer tax. The tax exists on a sliding scale. You’ll pay a rate of 0.5 percent for a condo at or below $55,000, and 2.5 percent for units over $2,000,000. Of course, you’d be very lucky to find a condo under $400,000 right now. But if you do purchase one at that amount, expect to pay the tax at a rate of 1.5 percent. If you’re a first-time buyer, you may qualify for a rebate.
City land transfer tax
The municipal land transfer tax rates are the same as the provincial rates. However, there are some small differences. For rebates, there are maximum amounts you can receive for higher-priced condos. The maximum sums for the Toronto land transfer tax are different than those for the Ontario tax.
Property tax, condo fee, and utility adjustments
If you’re buying a resale unit, the seller must be reimbursed for any property taxes, condo fees, and utilities they’ve paid for after your closing date. You’ll be responsible for repayment.
For new condos only
Tarion Warranty
For new condos, builders must provide warranty coverage for a variety of potential issues. Examples include major structural defects and compensation for closing and occupancy delays. Here’s how the fees are determined.
HST
When you purchase a brand new condo, you’ll also have to pay the provincial harmonized sales tax (HST). This tax is equal to 13 percent of your purchase price.
Other condo closing costs to consider
Moving
Moving costs vary, but accounting for them will help you budget more accurately. If you’re hiring a mover in the city of Toronto, you’ll likely pay around $1000 for a one-bedroom unit. Needless to say, renting a truck and going the do-it-yourself route can result in cost savings.
Upgrades & renovations
Renovation costs are totally dependent on how much work you want to perform on your new space. Keep in mind that you’ll generally need to receive condo board approval before you make your changes!
Have more questions about condo closing costs? Call or text me at 416-500-5360, or send me an email at rashid.notash@rogers.com and ask away!
