Ontario Closing-Cost Guide
The purchase price is the headline. Closing costs are the part that determines whether you can actually complete comfortably.
Closing costs on a new home in Ontario are more numerous and less predictable than on a resale purchase, because a builder agreement includes adjustments that a resale agreement does not. This guide lists them so nothing arrives as a surprise.
Ontario land transfer tax
Land transfer tax is payable to the Province on closing, calculated on marginal bands: 0.5% on the first $55,000, 1% from $55,000 to $250,000, 1.5% from $250,000 to $400,000, 2% from $400,000 to $2,000,000, and 2.5% above $2,000,000 on one and two-unit residential properties.
A municipal land transfer tax applies only within the City of Toronto. Purchases in Vaughan and elsewhere in York Region pay the provincial tax only.
First-time buyers may claim a provincial refund of up to $4,000, subject to eligibility. Confirm current rates and eligibility with your lawyer at the time of closing.
Builder adjustments and levies
This is the category that most often exceeds expectations. Depending on the agreement, adjustments can include development charges and municipal levies, education levies, utility connection and meter installation charges, Tarion warranty enrolment, the cost of a hydro or water meter, grading or landscaping deposits, and occupancy-period fees.
Some of these can be capped in the agreement. Whether they are is a negotiation point, and the cap amount matters as much as the existence of one. Ask for the cap in writing before you sign.
Ask for a written estimate of total closing adjustments before signing, and ask which of them are capped and at what figure.
HST
New homes in Ontario are subject to HST. For an owner-occupied purchase the builder typically includes the tax in the quoted price and claims the new housing rebate on the buyer's behalf, subject to the buyer signing the rebate assignment and meeting the occupancy conditions.
If you buy as an investment and rent the home out, the owner-occupancy rebate does not apply at closing and you may need to claim the rental rebate separately afterwards. This changes your cash requirement materially. Raise it with your accountant and lawyer early if it applies to you.
Legal fees and disbursements
Expect a lawyer's fee plus disbursements covering title search, registration, title insurance, software charges and courier costs. New-build closings involve more documentation than resale, so quote comparisons should be on a total basis rather than the headline fee.
Mortgage-related costs
- Appraisal fee, where the lender requires one
- Mortgage default insurance premium if your down payment is under 20% — note that in Ontario the provincial sales tax on that premium is payable in cash at closing
- Any lender administration or discharge fees
- Interest adjustment between the funding date and your first payment date
Prepaid and pro-rated items
Property tax already paid by the builder for the period after your closing is charged back to you as an adjustment. The same applies to any prepaid utility or common-element charges. These are usually modest but they belong in the calculation.
Post-closing costs
Not technically closing costs, but they arrive at the same time: window coverings, appliances if not included, light fixtures, landscaping, fencing, moving, and a supplementary property tax bill once the new assessment is issued. Buyers who plan only to the closing date find these uncomfortable.
A working rule
Set aside a meaningful contingency above your calculated closing figure. The precise percentage depends on your purchase, but a buyer who arrives at closing with no buffer has no room for the one adjustment nobody anticipated.
Frequently asked questions
What are builder adjustments on a new home?
Builder adjustments are additional costs settled on the closing date, covering items like utility meter installations, development levies, and Tarion enrollment fees. These costs are separate from the initial purchase price. It is important to review your contract with a lawyer to understand any caps on these levies for your Woodbridge home.
Is HST included in the purchase price?
For new homes in Ontario, the Harmonized Sales Tax (HST) is typically included in the advertised purchase price, assuming the home will be the buyer's primary residence. If the home is an investment property, the buyer may need to pay the HST upfront and apply for a rebate later. Consult a tax professional for details.
What legal fees should I expect when closing?
Legal fees for a new home purchase in Ontario generally range from $1,500 to $3,000, depending on the complexity of the transaction and disbursements. Your lawyer will handle the title transfer, calculate land transfer taxes, and coordinate with your lender. Budgeting for these professional fees is essential for a smooth closing in Vaughan.
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