When purchasing a condo, whether it’s your first time or you’re a seasoned veteran, it’s important to understand all the fees associated at closing while coming up with a budget. Many only budget for the initial down payment and forget about home inspections, real estate legal fees, Land Transfer Taxes and other miscellaneous items. While on their own, these costs are only a fraction of the home price, they can add up very quickly.
The down payment comprises the largest portion of total cash closing costs. While the CMHC mandates a minimum of 5% down on the purchase price, this can lead to higher CMHC insurance premiums (financed with your mortgage). In addition, sales taxes on CMHC insurance premiums are to be paid at closing by the buyer. While recommended to put at least 20% down to avoid CMHC insurance premiums, it can be often difficult with rising home prices.
Depending on the makeup of the deal, the seller will often require the buyer to place either a % or a fixed dollar deposit (i.e. $10,000) after the offer has been accepted. The buyer would only owe the total cash closing costs minus the deposit.
Most offers are conditional based on a home inspection. Though become less important as condos become more prevalent, they are, none-the-less, a necessary costs. A typical home inspection will cost anywhere between $250-$500. Condo Move has a network of Toronto home inspector that we rely on, find out more information here.
Real Estate Lawyer Fees
Legal fees depend on how complicated the purchase transaction is, as well as the lawyer’s expertise. Most of the time, there will be a base fee that depends on the type of home (detached, condo, etc.) and then you’ll pay for disbursements (faxing, photocopying, etc.) and registration fees. The cost will also depend on whether you’re buying, selling or refinancing. Expect to pay around $1,500 + HST in legal fees and disbursements when all is said and done. Looking for a highly qualified Toronto real estate lawyer? Visit here to find out more information.
Land Transfer Taxes
Land transfer taxes are highly dependent on the price of a home. In the example below, a buyer of a $500,000 condo would pay roughly $12,200 (before any first time home buyers rebates) or $6,475 with rebates. This fee has to be paid at closing and can not be rolled in with your mortgage.
Sales Tax on CMHC Insurance Premiums
If you are putting less than 20% down, you will be responsible for paying CMHC insurance premiums. While these premiums can be rolled in with your mortgage, unfortunately, the sales tax (8% in Ontario) can not.
Closing costs calculator for a first time home buyer ($500,000 purchase with 10% down):
As discussed above, first time home buyers are eligible for a rebate on the Land Transfer Taxes. In the case of the above example, the first time home buyer would receive a rebate of $6,475. Total closing costs on a $500,000 condo would be approximately $59,373.
Closing costs calculator (NOT eligible for First Time Home Buyers Credit) ($500,000 purchase with 10% down):
If you do not qualify as a first time home buyer, there is unfortunately no rebate on land transfer taxes. As a result, buyers would be required to pay the full $12,200 in land transfer taxes to the municipal and provincial including the PST (8% in Ontario) on the full amount at closing.
As always, we recommend contacting a real estate agent to walk you through the process.