Closing Costs Guide for Home Buyers
You’ve found the perfect home – with all the bedrooms you’ll ever need, enough outdoor space to grow tomatoes and peppers for your mouth-watering salsa and a great view from the family room couch. Your pre-approved mortgage says you can afford the property and you’re more than ready to sign the contract.
Land transfer tax
When you buy a property, you must pay a land transfer tax to the provincial government, and sometimes also to the municipality (e.g. Toronto). The amount of the land transfer tax depends on the value of your property and varies greatly by location, especially from province to province.
This tax for most Canadians is based on the purchase price of their property. However, if you buy your home in Alberta or Saskatchewan the land transfer tax is a much smaller cost. For example, the land transfer tax on a $500,000 home in Toronto is $12,950, split equally between provincial and municipal taxes. In Edmonton, Alberta, the land transfer tax for a $500,000 home with a 20% down payment is only $280 . You can estimate your land transfer tax using our Land Transfer Tax calculator.
Property appraisal fee
Home inspection fee
Both your mortgage provider and your lawyer require a current property survey certificate on the home, and the cost is typically part of the legal fee. If the certificate doesn’t reflect additions and improvements to the property, and your lawyer isn’t covering the cost, then your real estate agent should negotiate with the other agent as to who will cover the expense of a new certificate. The cost varies by location, type of survey, type of property and geographic and legal complications with the general range being between $350 and $600 [3,4].
Government registration fees
CMHC mortgage insurance
Non-resident speculation tax (NSRT)
If you’re buying a home in the Greater Golden Horseshoe Region near Toronto and you’re not a citizen or permanent resident of Canada, then the non-resident speculation tax (NRST) kicks in. This tax is equal to 15% of the value of the property. You can obtain a full rebate of the NRST if you stay in Canada by becoming a permanent resident within four years of purchase; or by enrolling full-time as an international student for two years after purchase; or working as a foreign national in Ontario for one year after purchase . If you are not a permanent resident or citizen of Canada, a $500,000 house would cost you an NRST of $75,000.
Estoppel certificate fee
You will need an Estoppel certificate if you are buying a condominium or condo apartment. The certificate comes with the financial statements of the condo board and outlines all the common fees for your unit and the services you will receive in return. It also lays out all the penalties for any infractions of the condo rules. The Estoppel certificate usually costs around $100.
HST/GST on New Construction Housing
Property tax adjustments
The bottom line
Unless you’re ready for them, all the closing costs can be a shock just when you’re ready to sign on the dotted line. Most people’s closing costs come in at 2-4% of the property’s purchase price, so be safe and check your closing costs in advance.
1. “The Alberta Land Transfer Tax does not Exist”. Ratehub.ca
2. “Closing Costs”. Bank of Montreal.
3. “Closing Costs”. Royal Bank.
4. “How Much does it Cost to Hire a Land Surveyor?”. HomeAdvisor
5. “Understanding Title Insurance”. Financial Services Commission of Ontario.
6. “What is CMHC Mortgage Loan Insurance?”. Canada Mortgage and Housing Corporation.
7. “Non-Resident Speculation Tax”. Ontario Ministry of Finance.
8. “https://en.wikipedia.org/wiki/Bill_28_(British_Columbia)” Bill 28 Wikipedia page
10. “GST/HST” New Housing Rebates”. Government of Canada.