This is a guide to some of the common closing costs that you can expect when purchasing you next home. For a detailed break down you may also check out the Mortgage Calculator. (The information below should be used as a guideline only as costs may vary. Seek independant legal advice from your lawyer or notary):
Property Transfer Tax
This provincial tax is based on the property's purchase price and calculated as follows:
- 1% on the first $200,000 of the purchase price, 2% on the portion of the purchase price between $200,000 and $2 million, and 3% on the portion of the purchase price above $2 million. If the fair market value of the property is more than $3 million, an additional 2% is charged on the portion above $3 million.
The tax is levied when property changes hands. First time buyers may be exempt, or partially exempt for purchases up to $525K (2024) if you qualify.
Goods & Services Tax (GST)
If applicable, GST is charged on top of the purchase price, currently at 5%. When the tax applies, it is paid by the buyer to the seller. The seller remits the GST to the government of Canada. GST may apply to a variety of real estate properties including new housing, commercial/industrial, short term rentals, larger acreages and farms, etc. Used residential property that has not been "substantially renovated" are typically exempt from GST. The tax legislation is complicated and there may be cases were it would be recommended to obtain tax advice from a real estate lawyer to confirm if GST is applicable or not. A GST New Housing Rebate, or partial rebate may apply to a buyer who is an individual using the house as their primary place of residence and the purchase price is less than $450,000.
Lawyer/Notary Fees
Legal costs for buying a new home with a mortgage are approximately $1500+ regardless of whether the buyer retains the services of a Lawyer or Notary Public. It is important to understand what is or is not included in the fees and what might be added as additional charges (holdback charges). Costs that are usually included are professional fees, land title search and registration fees and miscellaneous office disbursements plus GST and PST.
Adjustments / Disbursements
There a some closing adjustments which have to be calculated to cover items such as municipal property taxes, municipal water and sewer fees, strata maintenance fees, rent and security deposits. Each of these items will be pro-rated by your lawyer or notary. For example:
Municipal taxes - [Total for year / 365 X number of days until the end of the year.]
Mortgage Insurance
If your down payment is less than 20% of the home price, you will typically need a high-ratio mortgage. A high-ratio mortgage usually requires mortgage loan insurance. CMHC is a major provider of mortgage loan insurance. Genworth Canada Financial and Canada Guarantee are private insurance options. Your lender may add the mortgage loan insurance premium to your mortgage or ask you to pay it in full upon closing. Consult with your mortgage broker or lender for more details.
Example of $300,000 Home Closing Costs:
- Deposit/Downpayment: $15,000 (5% minimum)
- Property Transfer Tax: $4000 (1% of first $200K & 2% on the remainder. First time home owners may be exempt).
- GST: $15,000 (5% on NEW homes & commercial properties, excluding rebates)
- Mortage Insurance: Fee can be added to mortgage amount (% of purchase price) $10,000 down pymt = 10% of mortgage + CMHC Insurance (2% of purchase price)
- Appraisal Fee: $400 & up (most mortgage lenders will absorb this fee unless there are unusual circumstances).
- Lawyer/Notary fees: $1500
- Prepaid property tax & Utilities: Adjustments calculated by lawyer if pre-paid by the sellers.
- Home Inspection: $700
- Survey: $2000 and up
- Title insurance: $400
Need help crunching the numbers? Fill out the form below and I will help make sense to it all...
Purchase Example
Purchase Price $599,000
Down Payment $29,950
Deposit $10,000
Legal Fees $1500
Property Transfer Tax $9,980
Appraisal Fee $700
Title Insurance $400
Tax Adjustment ?
Total Closing Costs $12,580
Net Due at Lawyers $42,530
Other Potential Costs
Survey certificate $2000
Home inspection $700
Utility hook-up fees (telephone, cable, etc)
Renovations and/or repairs
Strata/lease fees (If applicable)
Home insurance
Moving costs
*Consult your lawyer or notary