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October 15, 2021

How condo closing fees work: CONNECT Asset Management

CONNECT Asset Management works with clients to secure high yield investments in the pre-construction condominium market. We work with you to establish a real estate portfolio that will work for you leading up to and during your retirement.

How does it work? We negotiate with the industry’s leading developers to secure deep discounts reserved exclusively for our clients. By promising a high volume of sales in a short period of time, developers extend exclusive incentive packages to us that we can then pass on to our subscribers.

We are committed to getting you the best units at the best prices at the best projects. In an attempt to bring transparency to an otherwise muddled industry, we take a data-centric approach to providing you with actionable insight into the world of condominium investing.

For more info, contact:

Ryan Coyle, Co-Founder

CONNECT Asset Management

(416) 800-9272

Closing fees when buying a condo in Ontario

Sometimes, a story will appear in the news: “Condo buyers caught off guard by high closing costs.” Someone purchases a condo or other property without doing their homework. As the sale goes through, they’re surprised to find that closing costs are higher than expected due to fees that they didn’t budget for, especially in Toronto.

It’s unfortunate that high closing costs come as a surprise to some people. But the truth is, there are no costs you can’t account for beforehand. You must always consider how additional fees can raise your closing costs when budgeting for your purchase. Buying real estate can be a challenging process, and it’s one of the most expensive purchases a person will ever make. If you are spending so much money on a property investment, you should be doing your research!

But we understand your struggle. The many different closing costs can be mystifying at times. That’s why in today’s article, we’ll help clear up the confusion around closing costs. Here are some of the most expensive condo closing costs that investors should factor into their accounting.

What are closing costs: deposit

The deposit should come as no surprise. You’ll need to pay a certain percentage of the price of the condo on signing, and throughout the building process, just like you would need to make a down payment on a house. Make sure you know what the payment structure is, and ask for this in writing. One advantage to pre-construction builds is that builders break up the deposit structure into smaller amounts. That way, you don’t have to pay the deposit all at once. You can space out three or four smaller installments that you pay for over a few months to a few years. A 20% down payment can be intimidating, but many pre-construction developers accept four 5% payments over the course of the building process which is much more manageable. Deposits and down payments make up most of the fees, but other little things can add up!

What are closing costs: Land Transfer Tax

Land transfer taxes can add a surprising amount above your purchase price. This is especially true for real estate in the city of Toronto where you will not only have to pay the Ontario Land Transfer Tax but also the Toronto Land Transfer Tax. When you buy a property, tax is paid by the buyer on the total value of the property being exchanged.

Here’s what you’ll pay under the Ontario Land Transfer Tax:

  • 0.5% on the first $55,000
  • 1.0% on the amount between $55,000 and $250,000
  • 1.5% – on anything between $250,000 and $400,000
  • 2.0% – on anything over $400,000

There is some relief for first-time buyers, as they may qualify and receive a credit worth up to $2000.

The Toronto Land Transfer Tax has a similar structure to the provincial transfer tax:

  • 0.5% – on the first $55,000
  • 1.0% – on the amount between $55,000 – $400,000
  • 2.0% – on anything over $400,000. Once again, first-time buyers in the city have a bit of relief. They’re exempt from paying on the first $400,000.

If you were going by the benchmark purchase price of a condo in Toronto ($352,000), you’d pay $3,755 for the Ontario Land Transfer Tax and $3,245 for the Toronto Land Transfer Tax. That means you’ll pay $7,000 total, or almost 2% of the purchase price, in Land Transfer Taxes alone. If you are lucky enough to be an eligible first-time buyer, you could save the entire amount of the Toronto tax in this scenario, but only if you remember to apply for it.

This example is for real estate in Ontario, but in other provinces, you will have to pay for land transfer as well.

What are closing costs: Tarion Warranty Fee

Tarion, while a valuable layer of protection for your condo, doesn’t come for free. On new-build condos, there is an enrollment fee. The fee depends on how much the purchase price of your condo is. The Tarion enrollment fee is $802.30 for a condo that costs between $300,000 and $350,000, or $881.40 for a condo that costs between $350,000.01 and $400,000.00.

While the fee may seem like a pain – it’s worth it. If any problems arise resulting from shoddy workmanship, they can cost a lot more than $800 for the home buyer. It is possible that the builder has already factored the Tarion fee into the purchase price of your property, so you are covered.

What are closing costs: CMHC Insurance Premium

If you plan on putting less than 20% down on your condo, then insurance premiums on your mortgage are another fee you need to account for. The Canadian Mortgage and Housing Corporation (CMHC) usually requires the lender to pay insurance on any mortgage with less than 20% down, and these premiums are passed on to the property buyer. This is done to protect the lender from default on these comparatively riskier mortgage loans, while also allowing buyers access to more options in their property choice.

The rate varies from province to province but your mortgage insurance will typically be between 0.5% and 2.5% of the principal of the mortgage. Often, this fee can be factored into your mortgage so you won’t pay it immediately. Most real estate investments require a minimum of 20%, so you likely won’t need to consider the CMHC fee.

What are closing costs: legal fees

Legal fees are another standard closing cost to consider when buying a condo. Unless you are a lawyer or do all the legal legwork on your own (something we would not recommend) you will likely be paying a lawyer for their services. Depending on the lawyer you work with, you’ll pay between $1,000 and $2,500 in legal fees.

It’s important to choose a competent lawyer. Don’t think you can save on subpar legal help – this can cost you much more in the end if something goes wrong. Condos are a big purchase, and a lawyer is the best person to protect you from major issues.

What are closing costs: other fees the builder may pass to the buyer

A savvy investor knows how to ask the right questions when buying a property. There are some important questions you too should be asking.

  • What other fees are the builders passing on?
  • Will the builder cap closing costs?
  • Additional recurring fees (condo fees, maintenance fees, parking, property taxes etc.)

Other fees you need to consider when buying property, but may not be necessary depending on your situation are:

  • Home inspection
  • Property appraisal
  • HST, where applicable
  • Title insurance, and Utility service deposits
  • Builder and Educational levies

Generally speaking, closing costs usually add up to 1-4% of the purchase price. Although a 1% difference in closing cost may seem small, it could end up being thousands of dollars. The more homework you do, the better prepared you’ll be. And the less likely fees will surprise you. Hopefully, you now have a better understanding of fees on your condo purchase, and will have no surprises about your closing costs when you see them!

Looking to purchase a condo in the Greater Toronto Area?

CONNECT Asset Management is always here to help you break down your condo purchase. Connect with us and we can save you some time, and money!

About the Author

Corben joined CREW as a relative newcomer to the field of real estate and has since immersed himself and learned from the experts about everything there is to know on the topic. As a writer with CREW, Corben produces informative guides that answer the questions you need to know and reports on real estate and investment news developments across Canada. Corben lives in Guelph, Ontario with his partner and their two cats. Outside of work, he loves to cook, play music, and work on all kinds of creative projects. You can contact Corben at or find him on Linkedin at

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