{"id":7084,"date":"2017-10-05T11:11:37","date_gmt":"2017-10-05T18:11:37","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=7084"},"modified":"2017-09-28T09:01:46","modified_gmt":"2017-09-28T16:01:46","slug":"common-closing-costs-for-pre-construction","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2017\/10\/common-closing-costs-for-pre-construction\/","title":{"rendered":"Common Closing Costs for Pre-Construction"},"content":{"rendered":"<p style=\"text-align: justify;\">Buying a pre-construction home can be exciting \u2013 it offers buyers the chance to customize their own home, from the baseboards to the colour of the kitchen cabinets. However, it\u2019s easy to get caught off guard with closing costs when buying a pre-construction home. These hidden costs vary, depending on the value of the home, municipality, and whether or not if you\u2019re a first time home buyer, but the general rule of thumb is to have 2 \u2013 4% of the purchase price prepared for closing related costs.<\/p>\n<p style=\"text-align: justify;\">Here are some of the most common closing costs for pre-construction purchasers to take into account :<\/p>\n<p style=\"text-align: justify;\"><strong>Development Charges<\/strong><\/p>\n<p style=\"text-align: justify;\">Pre-construction properties have development levies charged by the city \u2013 a portion of these costs are typically passed on to the home buyers. These development levies are used towards capital and operational expenses for the city, such as funding new subway lines, and building new schools.<\/p>\n<p style=\"text-align: justify;\">When buying a pre-construction home, ensure that there\u2019s a cap on development charges to avoid a surprise at closing. Among low rise homes, there are other applicable fees, such as driveway paving, and community tree planting. Again, every situation is different \u2013 consult with your real estate lawyer to review the documents, in regards to any applicable fees.<\/p>\n<p style=\"text-align: justify;\"><strong>Tarion Warranty<\/strong><\/p>\n<p style=\"text-align: justify;\">Your Tarion Warranty is essentially a warranty for your pre-construction home. It provides coverage for the following :<\/p>\n<p style=\"text-align: justify;\">Deposits (paid to the builder prior to the construction of the home)<br \/>\nProtection against unauthorized substitutions<br \/>\nCertain defects in work and material (one- and two-year warranties)<br \/>\nSeven-year warranty for major structural defects<br \/>\nCoverage for common elements in condominiums<br \/>\nCompensation for construction delays or occupancy<br \/>\nAgainst financial loss for contract homes<br \/>\nMore information in regards to the coverage can be found on the Tarion website. The cost of enrollment depends on the purchase price of your home, which you can calculate here. For example, if your home is $532,000, your total enrollment fee would be $1,130, including HST.<\/p>\n<p style=\"text-align: justify;\"><strong>Taxes<\/strong><\/p>\n<p style=\"text-align: justify;\">There are two main taxes on pre-construction homes: the provincial land transfer tax, and HST. If you\u2019re purchasing a new Toronto townhouse, condo or house, though, there\u2019s also an additional municipal land transfer tax. For the Ontario land transfer tax, the rates vary, depending on the purchase price of the home. Using the same example as above, a $532,000 home would yield to a land transfer tax bill of approximately $7,100. If you\u2019re a first time homebuyer, you\u2019re eligible for a $4,000 rebate.<\/p>\n<p style=\"text-align: justify;\">To make it simpler, I recommend using RateHub\u2019s land transfer tax calculator to find out the approximate amount you\u2019d be paying.<\/p>\n<p style=\"text-align: justify;\">Pre-construction project pricing usually include the HST. In fact, the builders get the HST rebate on your behalf. However, if the property is not your principal residence (i.e. investment property), you will be dinged with a tax bill of 13% of your home\u2019s purchase price. If you\u2019re planning on using the home as an investment, make sure to budget for this additional tax.<\/p>\n<p style=\"text-align: justify;\">As indicated in the Ontario Fair Housing Act, there\u2019s also an additional 15% Non Resident Speculative Tax (NRST). Again, if you\u2019re not a Canadian Citizen, or a non-Permanent Resident holder, make sure to budget for this tax as well.<\/p>\n<p style=\"text-align: justify;\"><strong>Lawyer Fees<\/strong><br \/>\nOf course, there are also lawyer fees that need to be taken care off. Real estate lawyers have two main responsibilities: conducting a title search, and preparing a statement of adjustment. The statement of adjustment would include the closing costs mentioned above, and any additional applicable fees. It\u2019s typically expected to pay around $1200 \u2013 $1700 in legal fees, depending on the situation. As always, shop around for competitive rates, and experienced real estate lawyers.<\/p>\n<p style=\"text-align: justify;\"><strong>The Bottom Line<\/strong><br \/>\nDespite the stress, buying a new home is a fun experience. Do your research for the right real estate agent, lawyer, and pre-construction project to avoid any major issues in terms of closing costs, and property defects.<\/p>\n<p><a href=\"https:\/\/www.zoocasa.com\/blog\/4-pre-construction-closing-costs-you-should-know-about\/\" target=\"_blank\" rel=\"noopener\">4 Pre-Construction Closing Costs You Should Know About<\/a> by Jelani Smith | Zoocasa<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Buying a pre-construction home can be exciting \u2013 it offers buyers the chance to customize their own home, from the baseboards to the colour of the kitchen cabinets. However, it\u2019s &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2017\/10\/common-closing-costs-for-pre-construction\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"class_list":["post-7084","post","type-post","status-publish","format-standard","hentry","category-real-estate"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Common Closing Costs for Pre-Construction &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2017\/10\/common-closing-costs-for-pre-construction\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Common Closing Costs for Pre-Construction &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"Buying a pre-construction home can be exciting \u2013 it offers buyers the chance to customize their own home, from the baseboards to the colour of the kitchen cabinets. 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