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Closing Costs

When you find your perfect home and your offer has been accepted, you may think you're through with things. Think again. There are a number of costs that may come with the closing of the deal, according to the Canadian Mortgage and Housing Corporation, the government of Canada's national housing agency. 

Some closing costs include:

Mortgage Loan Insurance Application Fee and Premium

If your down payment is less than 25% of the home price, you may be required to purchase Mortgage Loan Insurance. To get this insurance you may be asked to pay the required application fee. The lender may add the mortgage insurance premium to your mortgage or ask you to pay it in full upon closing.

Appraisal Fee

Your mortgage lender may require that the property be appraised at your expense. An appraisal is an estimate of the value of the home. The cost is usually between $250 and $350 and must be paid when you contract for those services.


This is a part of your down payment and must be paid when you make on Offer To Purchase. The cost varies depending on the area, but it may be up to 5 per cent of the purchase price. If you wish to make a down payment of 5 per cent and you give a deposit of 5 per cent, then your down payment is considered to be made.

Status Certificate Fee

(not applicable in Quebec)This applies if you're buying a condominium or strata unit and could cost up to $100.

Home Inspection Fee

Remember that this may be a condition of your Offer To Purchase. A home inspection is a report on the condition of the home and will typically cost between $200 and $300, depending on the complexities of the inspection. For example, it may be more costly to inspect a home that has large square footage, one that is expensive or one where contaminants such as pyrite, radon gas or urea-formaldehyde are suspected.

Land Registration Fees

(sometimes called a Land Transfer Tax, Tariff or Property Purchases Tax)You may have to pay this provincial or municipal charge upon closing in some provinces. The cost is a percentage of the property's purchase price and may vary. Check with your lawyer/notary to see what the current rates are.

Pre-paid Property Taxes and/or Utility Bills

To reimburse the vendor for pre-paid costs such as property taxes, filling the oil tank, etc.

Property Insurance

The mortgage lender requires this because the home is security for the mortgage. This insurance covers the cost of replacing the structure of your home and it's contents. Property Insurance must be in place on closing day.

Survey or Certificate of Location Cost

the mortgage lender may ask for an up-to-date survey or certificat‚Äče of location prior to finalizing the mortgage loan. If the seller does not have one or does not agree to get one, you will have to pay for it yourself. It can cost in the $1000 to $2000 range.

Water Quality Inspection

If the home has a well, you will want to have the quality of the water tested to ensure that the water supply is adequate and the water is potable. You can negotiate these costs with the vendor and list them in your Offer To Purchase.

Legal Fees and DisbursmentsMust be paid upon closing and cost a minimum of $500 (plus GST/HST). Your lawyer/notary will also bill you direct costs to check on the legal status of your property.

Title Insurance

Your lender or lawyer/notary may suggest Title Insurance to cover loss caused by defects of tile to the property

(Source: Canadian Mortgage and Housing Corporation)

HST? - How It Affects 12 Matters In Ontario Real Estate

HST? - How It Affects 12 Matters In Ontario Real Estate

Beginning July 1, 2010, there will be sales tax in Ontario of 5% + 8% = 13% (12% in British Columbia) replacing the former 5% GST (Goods and Services Tax) and the former 8% PST (Provincial Sales Tax).

1) HST and Mortgage Brokerage Fees (to arrange a mortgage, if one uses a Mortgage Broker)

HST will not apply since mortgage brokerage services are exempt as part of the financial services industry.

2) HST on Real Estate Commissions

Generally, HST will be payable on commissions for any real estate sale closed after July 1, 2010. However, the general transitional rule (for sale contracts entered into before July 1, 2010), is if at least 90% of the services were performed prior toJuly 1, 2010, only 5% GST is payable (no PST). If an offer to purchase real estate was accepted prior to July 1, 2010, then the realtor services were performed prior to July 1, 2010, and only 5% GST should be payable even though the realtor's commission is not due for payment until the sale has closed after July 1, 2010.

Warning to sellers: If, prior to July 1, 2010, a seller is about to accept an offer to purchase (which will close after July 1, 2010), the seller should clarify in writing with the realtor that only GST will be payable on commissions due on a sale closingafter July 1, 2010.

3) HST and Rents Paid by Tenants

For residential tenancies, HST will not apply to such rents. For commercial tenancies (industrial, office or retail), HST will be charged on rents paid after July 1, 2010 (but most commercial tenants qualify to recover such HST payments through input tax credits).

4) HST and Condominium Monthly Maintenance Fees

For residential condominiums, HST will not apply on monthly common expenses,but HST is payable for commercial (retail), office, industrial) condo common expenses paid on or after July 1, 2010 (most commercial condo owners qualify to recover such HST payments through input tax credits).


For any part of services (labour and materials) provided after July 1, 2010 (no matter when a contract for renovations of a residence was signed), the part performed or provided after July 1, 2010, will be subject to HST.


HST will not be payable on the price if the property sold by the seller and bought by the buyer is personal use property. However, if the seller had been renting out the property more than 50% of the time during the seller's ownership, the price will likely be subject to HST. If the property being sold was part of a rental pool, HST will apply. Consult your tax accountant.


There will be no HST on the price of resale residential purchases.

Note: Resale residential purchases will therefore become a much more attractive investment (rather than buying from a builder) particularly when one considers that builder prices will result in 13% HST (whether built into the price or being structured in addition to the price by some builders in Ontario). Builder prices alsomust include higher increased current costs of labour, materials and land costs as well as substantial municipal levies and educational levies plus sizable closing adjustments (often being hidden by builders in the fine print of many pages in a builder's agreement), all of which are not payable by a buyer / investor who purchases resale residential property. (Think about it!)


If a residence being purchased has been "substantially renovated", it will be treated in the same manner as buying new construction from a builder and HST will generally apply to the price paid. See Canada Revenue Agency (CRA) Bulletin B-092 which states that a "substantial renovation", in effect, refers to a renovation where at least 90% of the interior of a building (excluding the foundation, external walls, internal supporting walls, roof, floors and staircases) has been removed or replaced.


No HST will be payable on the price of a resale apartment building (multi-unit residential). If part of such a building is commercial, the purchase price must be reasonably apportioned between the part of the building that is residential resale (HST exempt) and the other part of the building that has a commercial component, which part will be subject to HST.

10) HST on PURCHASE OF COMMERCIAL PROPERTIES (new or resale commercial properties closing after July 1, 2010 no matter when an offer was signed)

HST will apply to the purchase price; however, typically, buyers who obtain a GST registration prior to closing (must be registered for GST in the same manner as ownership will be taken) will not need to pay the HST on closing provided:

(a) a GST registration is obtained prior to the closing date


(b) the buyer signs an appropriate undertaking in the lawyer's office to become self-assessed.

Note: Watch out for the purchase of office condominiums, industrial condominiums, and retail condominiums, the price for which will be subject to HST (being subject to only GST on the price for closings prior to July 1, 2010).


(a) Farmland

HST will typically apply to the price of such land if farm land is sold alone; however, if the land is sold as part of a farming business, it can be treated differently. Consult your tax accountant.

(b) Building Lot

HST will typically apply to the price when the seller is involved in a commercial real estate activity; however, some lot sale prices might be exempt from HST if the seller is not engaged in a real estate commercial activity.

(c) Personal Use Of Vacant Land

No HST is payable if an individual sells personal use vacant land (which would have been exempt from GST).


(a) Builder's Agreement Prior to June 19, 2009

No HST is payable if an offer to purchase from a builder was accepted prior to June 19, 2009 (only GST will apply; however, most builders include GST inside the sale price).

Note: Buying by way of an assignment (where the builder sale agreement was signed prior to June 19, 2009) becomes attractive!

(b) Builder's Agreement Accepted after June 18, 2009

If an offer to purchase from a builder was accepted after June 18, 2009 and either occupancy closing (for a new condo purchase) or final closing occurs prior to July 1, 2010, HST is not payable; HST is payable if both occupancy (in a new condo purchase) and final closing occur after July 1, 2010.

(c) If Builder's Agreement Silent about HST

If an offer to purchase from a builder was accepted after June 18, 2009 and failed to make reference to HST, the sale price includes Ontario's 8% PST component of the HST if it is payable (which means that the builder must pay the PST and cannot charge it to the buyer).

(d) GST Rebate (calculated on the 5% GST part of the 13% HST)

Typically, most builders include the GST component of HST (being 5%) in the sale price based on the government GST rebate being assigned from the buyer to the builder (such GST rebate being 36% of the GST payable on the first $350,000.00 which is reduced to NIL as the price increases from $350,000.00 to $450,000.00, there being no GST rebate after $450,000.00).

Note: In order for the GST rebate to be assigned to the builder by the buyer, the buyer must qualify by the buyer or an immediate family member living in the unit. If not qualifying (such as an investor who will be renting out the unit), the rebate cannot be assigned to the builder and the builder will charge the cost of such unassignable rebate to the buyer on closing in addition to the purchase price, which results in the buyer being forced to make a separate application to the federal government to recover such rebate. To qualify for recovery of such rebate, the investor must own the unit for at least one year and reasonably expect to rent the unit to the initial tenant for one year. An investor need not wait the year to apply for and obtain the rebate but if the government later discovers that ownership was less than one year, the government might seek to recover the rebate paid to the investor.

(e) PST Rebate (calculated on the 8% PST Component of the 13% HST)

Warning: All builder agreements should be reviewed by a lawyer either before a buyer signs an offer or during any available cooling off period since some builder agreements require buyers to pay the 8% PST (or the Net PST) component of the HST in addition to the purchase price.

Regarding a PST rebate, only 75% of the 8% PST component of the HST is refundable to a buyer on the part of the purchase price that is up to $400,000.00 (being newly constructed from a builder since there is no HST on resale residential property). There is no government rebate on the 8% PST for the part of any pricethat exceeds $400,000.00! This means that 75% of 8% (being 6%) is refundable by the government and 25% of 8% (being 2%) is not on the first $400,000.00 of price.

Example: If the price from a builder is $500,000.00, the gross 8% PST component of the HST would be $40,000.00, but since the government offers a rebate of 75% of the 8% PST on the first $400,000.00, this will effectively (for a qualifying buyer whose immediate family member will be living in the unit) reduce the PST to 2% on the first $400,000.00 to $8,000.00. Since there is no PST rebate for that part of the price over $400,000.00, 8% is charged on the next $100,000.00 being a further $8,000.00 which means (for a qualified buyer who can assign the rebate to the builder) that the total net PST payable is $16,000.00. If the net PST is not included in the price of $500,000.00, the price plus net PST payable becomes $516,000.00. The gross 8% PST on $500,000.00 is $40.000.00 but (due to the rebate of $24,000.00 on the first $400,000.00) the net PST payable is $16,000.00.

Note: If the builder's agreement requires the Net PST to be paid by the buyer, the buyer pays $16,000.00 on top of the price. If the builder's agreement states that the Net PST is included in the price (as GST is typically with most builders), the price remains $500,000.00. Watch out!

Caution: An investor-buyer who will rent out the unit will not qualify for assignment of PST rebate to the builder and, therefore, on closing, must pay the purchase price of $500,000.00 plus the gross PST of $40,000.00 (being a total of $540,000.00) and then, after closing apply to the government for the rebate of $24,000.00 to be received if the investor qualifies (must be owning for one year and rent to a tenant who is reasonably expected to live in the unit for one year, although the rebate application can be made as soon as the purchase from the builder is closed).

(f) Qualifying for a Rebate (GST or PST) when Buying from a Builder

In order to qualify for GST or PST rebates, the property purchased from a builder must be intended to be a primary place of residence, which means that if a person has more than one residence in the world, (in order to qualify for the rebate) the unit must be the main place of residence and not a secondary residence.

Also, the residence purchased must be used as a primary place of residence (as stated above) by the buyer or a relation of the buyer. Relation of the buyer includes an individual who is related by blood, marriage, adoption or common law (including a former spouse or a former common law partner). Blood relation is limited to parents, siblings, children, grandchildren but does not include cousins, uncles or aunts.

(g) Additional Transitional PST rebate for NON-CONDOMINIUM Builder Purchase (where part of construction was done as of July 1, 2010)

If HST is payable on a newly constructed home (not a condominium) and if construction of the residence was at least 10% complete as of July 1, 2010, a transitional PST rebate of up to 2% of the sale price can be claimed on the PST component of the HST as follows:

% Completed As Of July 1, 2010

Portion Of 2% Of Price To Be Refunded

10% - 24%


25% - 49%


50% - 74%


75% - 89%


90% - 100%


Example: If buying a freehold townhouse, a semi-detached or a detached from a builder for $500,000.00 where construction was 95% complete on July 1, 2010 and closing occurs on July 15, 2010, PST rebate for qualified buyer will be:

(i) 75% of 8% on the first $400,000.00 = $24,000.00

(ii) 100% of 2% on $500,000.00 = $10,000.00

Total rebates $34,000.00

Instead of paying a gross PST of 8% on $500,000.00 being $40,000.00, the rebates of $34,000.00 would reduce the net PST payable to $6,000.00. The question is whether such Net PST is included or not included in the purchase price from the builder according to the terms of the builder's agreement!

Note: The PST transitional rebate of up to 2% of the purchase price can only be obtained if:

(i) HST is payable on the price where the builder's agreement was accepted after June 18, 2009 and closes after July 1, 2010;

(ii) the purchase is for new residential construction which is not a condominium;

(iii) construction is at least 10% complete as of July 1, 2010;

(iv) a certificate is obtained on closing from the builder stating the percentage of completion of construction as of July 1, 2010.

Note: the builder is not required to provide this to a buyer unless the terms of the purchase agreement with the builder requires such a certificate to be provided;


(v) an application for a transitional PST rebate is filed with the government by July 1, 2014.


Ontario has proposed transitional rules that assist businesses in the transition to a Harmonized Sales Tax (HST). For more information on the transitional rules for the HST, please call Canada Revenue Agency (CRA):

For Personal property and services - 1 (800) 959-5525

For Real property - 1 (800) 959-8287

To speak with an information officer about the introduction of the HST in Ontario, please call 1 (800) 337-7222 or 1 (800) 263-7776.

Source: Stephen H. Shub -

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