Closing & occupancy
What are the closing costs on a new construction home in Ontario?
Budget roughly 2% to 4% of the purchase price. On a $1,100,000 freehold home outside Toronto, expect about $30,000 to $45,000: land transfer tax of roughly $18,475, development levies, utility connections, Tarion enrolment, legal fees and grading deposits.
New construction closing costs are materially higher than resale, because a builder passes through a list of items a private seller never charges you for.
The list
On a $1,100,000 freehold home outside Toronto:
| Item | Typical | Notes |
|---|---|---|
| Ontario land transfer tax | ~$18,475 | Less up to $4,000 first-time buyer rebate |
| Toronto municipal LTT | ~$18,475 | City of Toronto only |
| Development charges / levies | $5,000 – $20,000+ | Uncapped unless you negotiated a cap |
| Utility and service connections | $1,500 – $3,500 | Water, gas, hydro, meters |
| Tarion enrolment fee | ~$600 – $1,500 | Scales with price |
| Legal fees and disbursements | $2,500 – $4,000 | Higher than resale; longer document set |
| Grading / sodding / driveway deposits | $1,000 – $3,000 | Often refundable later |
| Title insurance | $400 – $900 | |
| Property tax and utility adjustments | Varies | Reimbursing the builder’s prepayments |
| Occupancy or interim fees | Usually none on freehold | A condo item |
Realistic total outside Toronto: $30,000 to $45,000. Inside Toronto, add roughly $18,000.
The two that can run away from you
Development charges. Municipal charges rise, and a standard builder clause passes increases through to you with no ceiling. On a closing three or four years out this is a genuinely open-ended item. Negotiate a cap. It is the single most valuable amendment to ask for.
A failed HST rebate. If your price was net of HST rebate and you do not qualify, the builder bills the rebate amount at closing, up to $80,000. This dwarfs every other line above. Confirm your eligibility long before closing.
Not a closing cost, but due at the same time
An appraisal shortfall. If the home appraises below your purchase price, the gap is cash, on closing day. Why this happens.
What your lawyer will tell you, and when
You receive a statement of adjustments shortly before closing itemising all of it. “Shortly” is often a week or two, which is not enough time to raise money, which is why this needs budgeting years earlier. More on adjustments.
Ask your lawyer for an estimate of the statement several months out. Most will provide one, and it converts a nasty surprise into a plan.
Sources