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Tips for Buyers


It can be a nasty surprise for novice purchasers to discover on closing day, that their dream home can become a nightmare of hidden closing charges, costing them thousands of dollars more than expected. These extra charges are pesky and unpleasant, but are inevitable, so that first-time buyers should be fully aware at the outset of a transaction in order to set aside additional funds.The following will apply in most real estate deals. Caveat Emptor: "The Devil is in the details".

  • H.S.T A Harmonized and Services Tax applies to all new homes, but is generallyincluded in the purchase price. There is no H.S.T tax on re-sale housing. Clarify your obligation with your lawyer or accountant before purchasing. Note, that professional fees are subject to H.S.T, as are any chattels being purchased. LEGAL FEES AND DISBURSEMENTS

  • Ask your lawyer in advance to estimate these costs for you so there are no little surprises such as Law Society fees and charges for an Estoppel Certicate. ADJUSTMENTS

  • This refers to your proportionate share of realty taxes, utility charges, condo maintenance fees etc. If the original owner has paid these in advance, the new buyer must rebate these amounts on closing day. SPECIAL LEVIES ON NEW HOMES

  • Be sure to read the fine print before buying. In new condominiums, the purchaser is required to pay extra monthly fees to establish a Reserve Fund, and also pay back the Developer for deposit insurance, as well as various other BuIlder's costs. Study the Disclosure Documents thoroughly and consult a lawyer. INTERIM OCCUPANCY FEES

  • Between the time a new condominium is finished and the time it is registered, buyers are sometimes surprised to learn they must pay "rent" for several months according to a Phantom Mortgage. This is a significant extra cost to an all-cash buyer. Get professional advice from a realtor or lawyer. MOVING COSTS

  • Professional moving services can help minimize the trauma of a move, but the costs can be significant. If you have a choice of the closing day, select a date early in the month, on a non-weekend, when rates are cheaper. Also, be sure to reserve an elevator if you are buying a condo, and expect to pay a refundable damage deposit to the corporation of several hundreds of dollars for move-ins. CONTINGENCY COSTS

  • In a perfect world, all deals close on time, and life is good. In reality, snags abound. For various legal reasons, a few deals close late, "in escrow", or not at all. New condominiums, alas, hardly ever close on time, so have some extra funds available for temporary accommodation, if required. LAND TRANSFER TAX

  • This is generally the biggest hidden cost on closing. Depending on how expensive your new home is, this tax can be thousands of dollars. Happily, first-time buyers currently enjoy a substantial rebate if they are buying a principal residence. Here is the formula to determine what you will owe the Ontario government. Be prepared. Do the math before you buy. See LTT CALCULATOR on this site. CLICK MORE at the top of this page.

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