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Pre-construction Condo Closing Costs

Closing Cost

Buying your first condominium, whether you’re planning to call it home or use it strictly as an investment property, will probably be one of the biggest financial commitments you ever make.

At GTA-Homes, we’re keenly aware of this and we want to make sure you feel confident in knowing exactly what you’re getting into financially. One common mistake we see with pre-construction condominium buyers is that they’re not prepared for the various closing costs, and since buying a “new build” is a little different than purchasing a re-sale unit, we thought we’d help outline these for you.

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In addition to your deposit, you’ll be responsible for interim occupancy fees and final closing costs, which are paid separately from the purchase price of your suite. When you buy a unit in the pre-construction phase, you actually have two separate occupancy dates.

During the interim occupancy period, you are legally allowed to occupy your suite, but as the building hasn’t been registered, you don’t have the title and your mortgage won’t be valid quite yet. This stage can last anywhere from a few months to two years.

Usually it’s during this phase that you pay your deposit, and additionally, you’ll be paying the developer something called “occupancy fees.” These don’t go towards your final closing payments, nor do they take the place of your mortgage payments, which don’t kick in until final closing. Instead, these fees are calculated based on a few different factors including:

Interest on the unpaid balance of the purchase price of your condo, which is based on the bank’s rate at the time of your interim occupancy date. To be clear, this is the total purchase price, minus your down payment.
An estimate of what future property taxes will be
Condo maintenance fees

These fees are charged monthly during the interim period and are usually given to the developer in the form of post-dated cheques. When you meet with your lawyer to sign the Interim Closing Papers, you will also be giving them the cheques to send to your builder.

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Once the City has finished their final inspection and the building is officially registered, your final closing date will approach. Your lawyer will typically contact you once he receives this date from the builder and as soon as they inform you of this date, you should advise your lender.

Closer to the final closing date, your lawyer will contact you again with a copy of the “Statement of Adjustments,” a document that outlines the necessary financial adjustments that will be made as the property is transferred from the vendor to you. Some of these adjustments may include recalculations on property tax payments and condominium fees. This document package also includes a “Trust Ledger” which describes how the funds will move through the builder’s account on the day of closing and how much money you will need to bring for the closing process.

This is usually paid with a bank draft or certified cheque and covers the remaining closing costs, such as fees, title insurance, land transfer tax and the remainder of your down payment, if applicable.

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Below is a rough estimate of what you could pay at final closing for a pre-construction condo priced at $400,000 in Toronto
(please note that this varies based on your contract):


Common Expenses/Maintenance Fees/Condo Fees - Approximately $600 to $1200

Reserve Fund - usually equivalent to two months of condo fees, which could be approximately $1200

Realty Taxes/Property Taxes - This can vary, but our estimate for the City of Toronto is 0.75%, which would total approximately $3,000 in this case

Utility hookup fees, Tarion Warranty Enrollment Fee, Deposit Administration/Letter Charges, Discharge of Construction Mortgage, Site review by Tarion, Electronic Registration Fee, HST on Appliances - These are miscellaneous costs that can add up to approximately $4,000 or $5,000

Park Levies, Community Improvement Fees, Art and/or Education Levies - When a new space is developed, the developers are required to pay the municipality a certain amount for new park space, community resources or public art projects, if applicable. In turn, this is worked into the buyer’s closing costs. For a unit of our estimated price, this could be approximately $3000

Development Charges - Approximately $5000

Buyer’s Legal Fees - $1900

Land Transfer Tax (municipal) (provincial) - This is based on purchase price - use our calculator

The good news is that both investors and end-users are eligible for government rebates. Unlike a re-sale unit, a new-build requires you to pay HST on top of the purchase price. If you are buying a suite to be your primary residence, or a residence for an immediate relative like a spouse, child, parent or sibling, you will be eligible for the HST New Housing Rebate. You could qualify for approximately $24,000 towards the cost of HST.

If this is an investment property and you choose to lease out the unit for a minimum of one year, you are eligible to apply for the New Residential Rental Property Rebate from the Federal Government. To qualify, you will have to submit a copy of your purchase agreement, your Statement of Adjustments and your lease agreement, along with a standard application form. If you qualify, you can get up to $24,000, paid to you in four months or less. You have up to two years after your final closing date to apply for the NRRP.


Got all that? We know, it’s a lot of detail to take in. So if you’re thinking about purchasing a pre-construction condominium unit and need any of these costs clarified, contact us today. At GTA-Homes, we’re as passionate about crunching numbers as we are about real estate.

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