How much are closing costs in Toronto?

How much are closing costs in Toronto?

Justo Team | August 24, 2019

Buying a home is an exciting process, however, if you are serious about purchasing a home in Toronto, you must consider closing costs and budget for them. You might be thinking closing costs cannot be that much why should I worry about them? For example, taxes, if you are a permanent resident or citizen in Canada, can cost 4% of the home’s purchase price if you are purchasing a home within the City of Toronto.

You will be responsible for paying the City of Toronto’s Municipal Land Transfer Tax (MLTT) and Ontario’s Provincial Land Transfer Tax (LTT). And if you are not a Canadian citizen or permanent resident, be prepared to pay the Non-Resident Speculation Tax (NRST) which is 15% of the home’s purchase price, in addition to provincial and municipal land transfer taxes. Do we have your attention now?

Now, that we have your attention, in this guide you will find a guide to closing costs that you will encounter in Toronto if you are purchasing real estate in the City of Toronto, an explanation of what they are, and estimates for how much you expect to pay for your closing costs. As with our other guides, this guide is meant to be a jumping-off point not the be-all and end-all, definitive guide on how much you can expect to pay for closing costs when purchasing Toronto real estate.

This is meant to help figure out how much you might be able to expect to pay, what you end up paying might vary depending on who you are, your unique financial situation, the type of property you are buying, your nationality, how much your property’s sale price is, and more. 

Related article: 5 Common Mistakes to Avoid for a First Time Home Buyer in Toronto

Closing Costs in Toronto: Cost Explanations and Estimates

Ontario’s Land Transfer Tax (LTT)

Ontario’s Land Transfer Tax is a provincial tax that is payable for every transfer of land in the province of Ontario based on the value of consideration for the land in question, whether or not the land that is being transferred is actually registered in Ontario’s land registry system.

If you are buying property in Ontario or acquiring a beneficial interest in land in the province of Ontario, you will pay the land transfer tax to the province of Ontario when the title transfer or transaction closes. The province of Ontario for tax purposes defines land as including “but is not limited to, any buildings, buildings to be constructed, and fixtures (such as light fixtures, built‑in appliances and cabinetry).” 

Ontario’s Land Transfer Tax Land Transfer Tax (LTT) is usually based on the amount paid for the land (the gross sale price), in addition to the amount of money that remains for any mortgage or debt assumed as part of the arrangement to buy the land. 

Ontario’s Land Transfer Tax rates based on the value of consideration

  • Amounts up to and including: $55,000: 0.5% 
  • Amounts exceeding $55,000 and up to $250,000: 1.0%
  • Amounts exceeding $250,000, up to, and including $400,000: 1.5%
  • Amounts exceeding $400,000: 2.0%
  • Amounts exceeding $2,000,000, where the land contains one or two single family residences: 2.5% 

Calculating the Ontario Land Transfer Tax for a $500,000 property with one single or two single-family residences

  • 55,000 x 0,05 marginal tax rate = $275 LTT
  • 250,000 – 55,000 marginal tax rate = $195,000 x 0.01 = $1,950 
  • 500,000 -250,000 = 250,000 marginal tax rate = 250,000 x 0.015 = $3,750

Total Ontario Land Transfer Tax: $5,975 (Without the Land Transfer Tax refund for first-time homebuyers in Ontario)

With the maximum tax refund for first-time homebuyers in Ontario of $4,000  you would only be paying $1,975 for Ontario’s land transfer tax

Calculating the Ontario Land Transfer Tax for an $850,000 property with one single or two single-family residences

  • 55,000 x 0,05 marginal tax rate = $275 LTT
  • 250,000 – 55,000 marginal tax rate = $195,000 x 0.01 = $1,950 LTT
  • 400,000 -250,000 = 150,000 marginal tax rate = 150,000 x 0.015 = 2,250 LTT
  • 850,000-400,000 = 450,000 marginal tax rate = 450,000 x 0.02 =  9,000 LTT

Total Ontario Land Transfer Tax: $13,475

With the maximum tax refund for first-time homebuyers in Ontario of $4,000 you would only be paying $9,475 for Ontario’s land transfer tax

If you want to save yourself from having to do these calculations, you can use this free Land Transfer Tax Calculator, which allows you to input the purchase price for a home you might be interested in, your area to help you see if you will need to pay a Municipal Land Transfer Tax. This free land transfer calculator tool will provide you with information about what how much you could expect to pay for your land transfer tax if you are buying a property for a set price for in a given area of Ontario and if you will need to pay the municipal land transfer tax as well.

Related article: The Ultimate Buyer’s Guide for Buying a House in Toronto

Tax refunds on Ontario’s Land Transfer Tax (LTT) for first-time homebuyers

If you are a first-time homebuyer in Ontario, you can get a total tax refund of the Land Transfer Tax for any property whose value of consideration is less than $368,000. After $368,000 the maximum tax refund you can receive as a first time homebuyer in Ontario is $4,000.  There are requirements that you need to meet in order to be eligible for this tax refund for first-time homebuyers, they are outlined below.

Here are the requirements for first-time homebuyers to claim a tax refund on Ontario’s Land Transfer Tax (LTT):

  • You must be at least 18 years of age and you cannot have ever owned a home or interest in a home anywhere else in the world. If you are buying a home with your spouse in Ontario, they cannot have ever owned a home or interest in a home, anywhere else in the world while they were your spouse. You cannot qualify for this tax refund if you have previously owned a home whether you acquired your home through inheritance, gift, purchase, etc. and you cannot re-qualify as a homebuyer.
  • The purchaser must occupy the home they are purchasing within nine months of the date of transfer as their principal residence.
  • You must be a permanent resident in Canada or a Canadian citizen. If you buy your first home and within 18 months of this purchase, obtain permanent residency in Canada or Canadian citizenship, you can apply for the first-time home buyer’s tax refund for Ontario’s Land Transfer Tax (LTT) and submit a claim for the refund to the Ministry of Finance.
  • If you are purchasing a home with your spouse who is not a Canadian permanent resident or citizen, you can only get a refund for your portion in the interest of the house, not for their portion of the interest of the house. If your spouse gains permanent residency or becomes a Canadian citizen within 18 months of paying the Land Transfer Tax, you can claim your spouse’s interest in the refund. However, your refund claim with your and your spouse’s combined interest cannot exceed the maximum refund of $4,000. 
  • You must apply for this refund within 18 months of registering the title transfer for your new home.

Related article: Pros and Cons of Buying Homes in Downtown Toronto

If you are a first-time homebuyer when you should claim this tax refund for Ontario’s Land Transfer Tax (LTT)

If you qualify for the tax refund program for first-time homebuyers in Ontario, you can claim an immediate refund upon registering the title change for your property by doing the following:

If you claim this refund at the time of registration, this tax refund might help to offset the Land Transfer Tax you will be responsible for paying. If you do not claim this tax refund when registering your property, you must pay the Land Transfer Tax and submit a refund claim to the Ministry of Finance. No interest is paid on this refund, you can learn more about how to apply for this refund here.

If you have questions about calculating how much the land transfer tax you will be responsible for paying you can read more about Ontario’s Land Transfer Tax here or consult a real estate lawyer who you trust.

Toronto Municipal Land Transfer Tax (MLTT)

If you are buying real estate specifically in the City of Toronto, you will be paying Ontario’s provincial Land Transfer Tax, as well as paying the City of Toronto’s Municipal Land Transfer Tax (MLTT). The idea behind the City of Toronto’s Municipal Land Transfer Tax is similar to Ontario’s provincial Land Transfer Tax.

This is a municipal tax payable to the City of Toronto that is payable for every transfer of land in the City of Toronto based on the value of consideration for the land in question, whether or not the land in question that is being transferred is actually registered in the City of Toronto’s municipal land registry system. If you are buying property in the City of Toronto or acquiring a beneficial interest in land in the City of Toronto, you will pay this land transfer tax to the City of Toronto when the title transfer or transaction closes.

Below is a breakdown for Toronto’s Municipal Land Transfer Tax rates for all transfers including sales and unregistered dispositions of beneficial land on or after 1 March 2017.

Related article: How to choose the right mortgage broker in Toronto?

For property that contains at least one, and not more than two, single-family residences with a value of consideration of:

Value of Consideration – Toronto’s MLTT Rate

  • Up to and including $55,000.00 = 0.5%
  • $55,000.01 to $250,000.01 = 1.0%
  • $250,000.01 to $400,000.01 = 1.5%
  • $400,000 to $2,000,000.01 = 2.0%
  • Over $2,000,000 = 2.5%

For all other non-single family residences with a value of consideration of

Value of Consideration – Toronto’s MLTT Rate 

  • Up to and including $55,000.00 = 0.5%
  • $55,000.01 to $250,000.01 = 1.0%
  • $250,000.01 to $400,000.00 = 1.5%
  • Over $400,000.00 = 2.0%

Calculating Toronto’s Municipal Land Transfer Tax for a single-family home with a value of $600,000

  • $0-$55,000 (marginal tax rate = $55,000) 55,000 x 0,05 marginal tax rate = $275
  • $55,000-$250,000 (250,000-55,000 marginal tax rate =$195,000) $195,000 x 0.01 = $1,950 
  • $250,000-$400,000 (400,000-250,000 marginal tax rate = $150,000) 150,000 x 0.015 = $2,250
  • $400,000 to $600,000 (600,000-400,000 marginal tax rate = $200,000 = 200,000 x 0.02 = $4,000

Total Municipal Land Transfer Tax in Toronto: $8,475 (Without the City of Toronto’s Land Transfer Tax rebate for first-time homebuyers in Toronto)

With the maximum tax refund for first-time homebuyers in Ontario of $4,475 you would only be paying $4,000 for Toronto’s Municipal Land Transfer Tax.

If you would prefer having to do the math manually to calculate how much you could expect to pay for your Municipal Land Transfer Tax (MLTT) for the City of Toronto, the City of Toronto’s website has a free MLTT calculator that you can use to estimate how much your MLTT might end up costing you. 

Toronto’s Municipal Land Transfer Tax Fees

Description & Fee $

Toronto’s MLTT Administration Fee*: $79.50 + Harmonized Sales Tax (HST)

This is an administration fee that the City of Toronto charges for processing each MLTT transaction excluding the Harmonized Sales Tax (HST). The HST is payable on the transaction fee.

Toronto’s MLTT Refund Fee: $168.12

This is an administration fee that the City of Toronto charges for processing each Municipal Land Transfer Tax Refund or Rebate request made after the conveyance (title has been transferred) has been electronically registered. In other words, you will pay this fee, if you are requesting the tax rebate after registering instead of requesting the refund at the time you are registering this land transfer with the land transfer office.

*Toronto’s MLTT Administration fee is not applicable for properties that qualify for a full exemption under Section 760 (14) of the Toronto Municipal Code and nominal value MLTT transactions where the value of the consideration (VOC) is less than $14,399.00 Canadian Dollars (CDN).

Tax rebates for  first-time homebuyers for Toronto’s Municipal Land Transfer Tax (MLTT)

If you are a first-time home buyer in the City of Toronto and meet the requirements for the City of Toronto’s tax rebate for first-time homebuyers (the requirements for this program are the same as the requirements for Ontario’s tax refund for their provincial Land Transfer Tax, you can qualify for a tax rebate for paying Toronto’s Municipal Land Transfer Tax. You can learn more about applying for this rebate here.

Non-Resident Speculation Tax (NRST)

The Non-Resident Speculation Tax (NRST) only applies to people who are not permanent residents in Canada or Canadian citizens. In other words, if you are a Canadian citizen looking to buy property in Toronto who has residency in another country, you can relax since you will not be expected to pay this tax. The NRST implemented on 21 April 2017, means that people who are not permanent residents in Canada or Canadian citizens are expected to pay 15% of the value of consideration for residential property in the Greater Golden Horseshoe Region (GGH). 

If you are a non-resident buying land in Toronto, the NRST will apply to the transfer of land containing at least one and not more than one single-family residence, e.g. a detached house, a semi-detached house, a townhouse or condo. If you are buying property using a foreign entity when a foreign entity is purchasing multiple condo units in a building, each condo unit would for the purpose of this tax be considered one single-family residence, so you would pay this tax on each unit purchased.

Land that is not considered to be a single-family residence island that contains more than one single-family residence, this would include duplexes, triplexes, fourplexes, fiveplexes, and sixplexes. And you also are not responsible for paying the NRST for land that contains multi-residential apartment buildings with more than six units, agricultural land, commercial land, or industrial land. 

Related article: How to Find the Best Place to Live in Toronto

The Greater Golden Horseshoe in Ontario includes the following geographic areas:

  • City of Barrie
  • County of Brant
  • City of Brantford
  • County of Dufferin
  • Regional Municipality of Durham
  • City of Guelph
  • Haldimand County
  • Regional Municipality of Halton
  • City of Hamilton
  • City of Kawartha Lakes
  • Regional Municipality of Niagara
  • County of Northumberland
  • City of Orillia
  • Regional Municipality of Peel
  • City of Peterborough
  • County of Peterborough
  • County of Simcoe
  • City of Toronto
  • Regional Municipality of Waterloo
  • County of Wellington, and
  • Regional Municipality of York.

If you are a U.S. citizen interested in buying property in Canada you can check out this article for U.S. citizens interested in buying property in Canada

Related article: Can U.S. citizen buy property in Canada?

Appraisal

You can expect to spend anywhere between $350 to $750 or more to have a professional come and appraise your home in Toronto and Ontario. How much your appraisal will end up costing you will depend on a variety of factors such as where your home is located, your home’s size, your home type, etc.

If you have multiple units or a larger home, you can expect to pay more to have the property appraised. Also, if you have a more expensive or a home that could be considered a luxury home, expect to pay more for an appraisal.

Home Inspection

On average you can expect to pay approximately $325 to $350 for a home inspector, but how much you will end up paying might range somewhere between $275 and $500 or even more depending on where you are, the type of home being inspected, size of the home being inspected, and more. This is just the price for having a general home inspector come to your home and inspect it.

If you need additional inspections and need to bring in more specialized inspectors for your home if the findings from a general inspector indicate that you need to bring in someone else to come in and look at your potential new home. If this is the case then you can expect to pay even more for home inspections.

Land survey

If you are buying a detached single-family home and land, it is recommended that you have a professional come in and survey your property. It might seem like a waste to do this but this could help you avoid potential legal issues down the road related to property boundaries and helps you understand where your property lines are, and where your property ends and your neighbours’ property begins.

This could cost anywhere from $500 to $2,500 and beyond depending on where you are, how large your property is, etc.

This also includes title insurance which is recommended that you purchase and any legal fees associated with registering your home in your name, hiring a lawyer, etc. The more expensive than your home is, the more you can expect to pay in legal fees, so you should expect to pay anywhere from $500-$2,500 or more depending on the price of your home and your situation.

Down payment

You ideally, will want to be able to have a down payment that is at least 20% of the value of the home if not more if you can when purchasing your home. And you will need a 5% deposit available to be held in escrow to show the seller that you are serious about buying their home, this deposit will go towards your down payment.

In other words, if you are looking at a property that is $500,000 since your typical deposit is usually 5% of the overall purchase price, you would need to have $25,000 available so you can make your deposit within approximately 24 hours after the seller has accepted your offer on their home, this is especially helpful if other buyers are also submitting competing offers. If your down payment is less than 20% you will need to purchase mortgage default insurance.

Related article: How much will home staging cost in Toronto?

Canadian Mortgage and Housing Corporation (CMHC) Mortgage Insurance

In Canada, if you are purchasing a home with less than a 20% down payment you are legally required to purchase mortgage default insurance or Canadian Mortgage and Housing Corporation (CMHC) insurance. Mortgage default insurance protects lenders in case something happens and buyers default on their mortgages. Mortgage default insurance allows lenders to offer lower, favourable rates to people whose mortgages might be considered higher risk because they are making a lower down payment. 

You will need to purchase mortgage default insurance from the Canadian Mortgage and Housing Corporation (CMHC) if you are purchasing a home and your down payment is less than 20% of your home’s purchase price. Usually, how much your insurance is will depend on how much your loan is and how large of a down payment you are making.

The insurance regulations which govern CMHC mortgage default insurance rates and premium rates are the same nationally across Canada. Your insurance premium rate could range from 1.80% of the mortgage amount to 4.00% of the principal for your mortgage. Federal regulations governing CMHC insurance include the following rules:

  • CMHC insurance must be purchased for all homes with buyers making a down payment that is less than 20% of the purchase price
  • Homes whose purchase price is greater than $1 million are not eligible for CMHC mortgage default insurance which means that potential buyers and homeowners must make a down payment that is at least 20% of the home’s purchase price
  • The maximum amortization period for mortgages where buyers have CMHC insured mortgages is 25 years.
  • Homes with a purchase price that is greater $500,000 cannot be purchased anymore with a 5% down payment. The new minimum down payment is 5% of the purchase price for the first $500,000 and 10% of the home’s purchase price for any amount greater than $500,000.

The premium for your CMHC mortgage default insurance can be paid before you begin your mortgage or it can be added to your mortgage amount, i.e. added to your mortgage payment and this insurance is paid off during your mortgage’s amortization period with your monthly mortgage payments.

It is important to note that Ontario charges a provincial service tax (PST) for CMHC mortgage insurance, in Ontario, the provincial sales tax for CMHC mortgage default insurance is 8% of your CMHC premium and this provincial sales tax must be paid in full when you are closing on your home. This means that the Provincial Sales Tax that Ontario charges for CMHC mortgage insurance are separate from your CMHC mortgage insurance premium which is why you will be responsible for paying for this separately and why this cannot be added to the balance of your mortgage.

Related article: How Does a Second Mortgage Work in Ontario?

Canadian Mortgage and Housing Mortgage Default Insurance Premiums and Rates

It is important to remember that the premium for CMHC insurance is calculated as a percentage of your mortgage amount, this percentage which determines how much your premiums will depend on what percentage of your down payment is, and the amortization period for your loan. It is important to remember that your amortization period for your loan (i.e. how many years your mortgage will last must not be greater than 25 years).

Down payment as a percentage of your home’s purchase price5%-9.99%10%-14.99%15%-19.99%20% or higher

4.00%3.10%2.80%0%

If you want to find a tool that can help you estimate how much your mortgage insurance might cost, you can check out this free mortgage default insurance calculator for Ontario. This can help you estimate how much your mortgage insurance might end up costing you given how much your loan is for, what percentage of the purchase price you are putting down for your mortgage, your amortization period, and more. 

Harmonized Sales Tax (HST) for newly built and substantially renovated homes

Another tax that you will be responsible for paying if you are buying a pre-construction or newly built home or a home that has been substantially renovated is the Harmonized Sales Tax (HST). If you are buying a resale (existing home) you will not be responsible for paying the Harmonized Sales Tax. A home that is substantially renovated is a home where “(at least 90% of the interior of the existing house must be removed or replaced to be a substantial renovation).”

If you yourself renovated or hired someone else to renovate your existing home and added an addition to your home which at least doubles the size of your home’s living area “(for example, the addition of a full second story to an existing bungalow. Adding a sun porch, sunroom, family room, or bedroom by itself is not a major addition).” In these situations, this is what would be considered a substantial renovation for tax purposes.

The Harmonized Sales Tax (HST) consists of the combined tax rate, Ontario’s Provincial Sales Tax (PST), which is 8% and Canada’s federal Goods and Services Tax, which is 5%. In total, if you are buying a pre-construction or newly built home, the HST will be 13% of your home’s purchase price. However, you might be able to qualify for rebates for Ontario’s Provincial Sales Tax (PST) and/or the Federal Goods and Services Tax (GST).

Rebate for Ontario’s Harmonized Sales Tax (HST)

In order to be eligible for an HST rebate for buying your home, you will need to fulfill the following requirements:

  • The home is located in Ontario
  • This is a newly built home or home that has been substantially renovated
  • The home’s purchase price is less than $450,000 if you are going to be qualifying for the federal Goods and Services Tax (GST) rebate if your home’s purchase price is greater than $450,000 than you will not be able to qualify for the GST rebate
  • This home will be used as your primary residence for the buyer, their spouse, biological or adopted children, siblings, parents, and/or grandparents (this means your investment property or vacation property will not qualify for this rebate).
  • There might be other conditions that apply that determine who and who is not eligible for the HST rebates in Ontario

How much is the Harmonized Sales Tax (HST) Housing Rebate?

You can calculate the HST rebate based on federal and provincial tax rates. You can calculate the HST rebate for your federal taxes and the rebate for Ontario’s provincial sales tax (OST) (1 January 2016) by considering the following or you can check out the Canadian Revenue Agency’s web page on this and their worksheets for this and check out the Canadian Revenue Agency’s new housing GST/HST rebate forms here:

  • 5% of the GST for your home’s purchase price (plus the taxable assignment’s purchase price as applicable if the home’s purchase price is less than $450,001.
  • The first 6% of Ontario’s Provincial Sales Tax rate that is charged for the first $400,000 will be eligible for Ontario’s housing rebate. It is important to remember that Ontario’s Provincial Sales Tax (PST) is 8% of the home’s purchase price. This means that for the first $400,000 you will only pay 2% sales tax of the home’s value. You will then pay 8% of the home’s value for anything over $400,000. The maximum provincial sales tax rebate for new homes in Ontario is $24,000. 
  • The maximum federal Goods and Sales Tax (GST) rebate is an additional $6,000.

Tarion Warranty for newly built homes

This covers newly built homes, can range from $435 to $2,100, how much your warranty will cost depends on the price of the home. If you are buying a pre-construction or newly built home, you will be required to enroll in the Tarion’s New Home Warranty programme. Buyers can manage this warranty online. The premium you will end up paying for this will depend on your home’s purchase price and this warranty covers you for the first year of ownership.

Here is a link to a table on Tarion’s website which provides information on how much your warranty will be depending on your home’s purchase price. In some cases, some builders or developers might include the cost of the warranty in the sale price for your home. If this is not the case, you will have to pay this fee at closing. For example, if your home’s sale price is between $500,000 and $550,000 your warranty including the 13% Harmonized Sales Tax should cost you around $1,200.

Utility Service Deposits

You might need to put down deposits to open your utilities or transfer utilities from your current home to your new home, how much this might be and end up costing you will depend on you, your situation, etc.

Status certificate for condos

If you are buying a condo, you might need to pay for a status certificate for your attorney to review before closing on your home. This status certificate will include information from the condo association or corporation’s financial statements and bylaws, which can help you gain insight into how financially sound and solvent a condo association or corporation is before joining.

Your lawyer will review this document and can hopefully help you to figure out if you will pay significantly more condo fees with condo fees increasing if the condo association or corporation in question is facing any legal and/or financial challenges. The price of this certificate should not exceed $100.

Related article: Tips for Buying a Condo in Toronto

Development charges for pre-construction or newly built homes

If you buying a pre-construction or newly built home, your developer and/or builder might charge you fees related to developing the land or for your home. This may or may not happen and how much you can expect to pay will depend on your situation, how much your home costs, your builder/developer, etc.

Property Tax Adjustment and Reimbursements to Sellers

If the seller has paid property taxes for the rest of the year or time after their occupancy ends, you will be reimbursing them for the taxes that they have paid for the time that they will not be living in the home anymore. You might also be responsible for reimbursing the seller for other costs such as utilities if they had paid in advance for the time that they would not be in your home for something like utilities.

Potential repairs that might need to be done before you move in

Depending on your situation, new home, etc. you might need to do some repairs, replace things, maybe even do renovations, painting, etc. before moving in or when you move in. If this might be the case, i.e. you plan on buying a fixer-upper or might want to customize your home, do yourself a favour and budget for this. How much this cost, will depend on you, your needs, your home, what work that might need to be done, what you learn after your home inspection, etc. 

In other words, if you can try to have at least $600-$700 available in this case you might to do repairs or replace anything before you move in, in other words, be prepared for the possibility that when you see the results from your home inspection that there might be something or some things that need to be repaired or replaced. 

If you are planning on buying a fixer-upper, it is recommended that you have more money set aside for any renovations or work you might want to do to the home, while your budget might be x for a renovation, if you can try to have at least some wiggle room with this amount in case any unexpected surprises or issues come up when work starts on your home.

This way if it ends up being more expensive or you have to cover the cost of repairing or replacing something, you can hopefully avoid the fall out of dealing larger than expected costs for doing something or replacing something that you had not previously anticipated doing. The last thing you want is to be like one of the people on those home makeover shows where they buy homes and they inevitably have some problem that costs them (insert dollar amount) and puts them (insert dollar amount)  over budget for their project.

Homeowner’s insurance

Obviously, the more expensive the property the more your homeowner’s insurance will cost you. But plan to budget at least $900 per year for this cost, you might have to pay some of this cost if you are enrolling in a new homeowners insurance plan or moving into a more expensive home

Locksmith for new keys

When you move into a new home, you will need to hire a locksmith to come to change all of the locks and rekey your home. This could potentially range anywhere from $150-$350 or more to rekey your whole home, this cost will depend on where you are, how large your home is, the types of locks you are using, and other factors.

Additional miscellaneous costs that cannot be accounted for

There might be additional costs that you might not be able to plan or account for now that you will need to pay for such as hiring movers that you should be budgeting for. You ideally should have extra money on hand or access to additional funds so you will be able to cover these costs.

Also, depending on how much you are spending, you could end up spending a significant amount of money paying taxes, e.g. the provincial and municipal land transfer taxes. You might also have to pay other additionally taxes not mentioned in this article since buying a home and buying property are expensive and time-consuming processes.

Related article: GTA home buyers and sellers are overpaying by thousands

How much to budget for closing costs

It is commonly agreed upon that you should usually at least 1%-5% of the purchase price for your home purchase is closing costs, but given how much the municipal and provincial land transfer taxes are for people buying real estate in Toronto, you should probably consider budgeting at least 5-7% of a home’s gross value (sale price) if not more for closing costs.

The more expensive the home you are purchasing the higher the taxes will be and the larger the home means that your costs will also be higher. If you are purchasing a pre-construction or newly built home, you will need to budget to pay for more taxes and other costs that you will not need to cover if you are purchasing an existing or resale home.

Conclusion

After reading this guide you should have developed a clearer understanding of what closing costs are, how much they might cost you, and what they are for. Ideally, if you are looking to buy a home or invest in Toronto real estate now that have an idea for how many closing costs will set you back, you will be able to better budget for them and prepare for them since there is so much more to buying a home than the home’s initial price tag.

Buying a home and investing in real estate whether you are buying in Toronto, Ontario, or somewhere else is a process even if you will be making an all-cash offer. If you have any further questions about closing costs, you should ask a real estate lawyer, agent, and/or real estate broker.

Related article: How to Pick an Agent when Flipping a House in Toronto

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