Some Typical Closing Costs and Other Surprises

On the day of closing, buyers should be prepared to have extra money on hand to cover closing costs:


LAND TRANSFER COSTS

This is a provincial tax levied when title to land is transferred. It is payable by the Purchaser upon the registration of every transfer of land. (i.e. on closing day) The calculation of this tax on a single family home is based on the purchase price and increases as follows:

• 0.5% is levied on the first $55,000.00 of purchase price
• 1.0% is levied on the amount between $55,001.00 and $250,000.00
• 1.5% is levied on the amount between $250,001.00 and $400,000.00
• 2.0% is levied on any remaining amount over $400,000.00

City of Toronto purchases are subject to a provincial and municipal tax effectively doubling the amount to be paid. Some rebates are available on the municipal portion for first time home buyers.


Commercial rates vary from the above residential rates

HOME INSURANCE

Lenders will require that the home is protected against perils such as fire before the mortgage loan is advanced. Home Insurance must be arranged and in place in order to close your home.

FEDERAL & PROVINCIAL TAXES

Typically, resale homes are exempt from GST. A home that is classified as ‘Extensively Renovated’ may be subject to GST. GST is payable on the fees paid to real estate agents, mortgage brokers, appraisers, lawyers’ fees etc.A new home is not exempt from GST even if the home is in an individual’s name! The GST may be paid by either the builder or the buyer, depending on what is negotiated at the time of purchase.


HOME INSPECTION

A professional home inspector may be employed by either the seller-prior to marketing the home for sale, or the buyer-prior to 'firming up' the offer. An inspection is done to ensure that no major deficiencies exist at the time of selling or buying. It is also a wonderful education for the buyers to 'learn' about their new home and some of the maintenance they can expect to look after. A list of reputable home inspectors is available.


MISCELLANEOUS

Remember the costs incurred with:

• Telephone
• Cable Companies
• Cable/Internet
• Tax Adjustments
• Incidentals
• Post Office(redirection of mail)

LEGAL FEES

Paid by both Seller and Buyer: A lawyer will charge a fee for his/her service plus pass on to the client all costs that are incurred in the process. A partial list of these items is as follows:

• Registering transfer & mortgage
• Obtain tax certificate
• Get utility arrears certificate
• Estoppels certificate. (Condo)
• Title Insurance
• Manage closing day
• Courier, photocopying etc.
• Title Insurance

ADJUSTMENTS

The funds required to complete the transaction will include adjustments for prepaid expenses.For example, if a vendor had paid the property taxes for the entire year, the new purchaser would owe the vendor that prepayment. Other such adjustments are as follows:

• Property taxes
• Utility bills
• Condominium fees
• Interest Adjustments
• Oil Furnaces are typically filled on closing and the buyer pays for the full oil tank as an adjustment on closing.

The purchaser will benefit from any other cost which the vendor has paid. Another way to explain, is to simply say that the purchaser pays for all expenses of the home starting from (and including) the day of closing.


MOVING COSTS

If you are hiring a professional mover, be sure to obtain a couple of quotes well in advance. Whether hiring professionals or calling on favours from friends and family, remember:

• boxes, packing tape, packing foam, labels
• dolly and truck rental fees
• pizza