Pre-Construction Closing Costs in Ontario — Complete Breakdown (2026)

Why Pre-Construction Closing Costs Are Different

Closing costs for pre-construction homes are higher and more complex than resale. The key differences: HST on new homes, development charge adjustments, Tarion enrollment fees, and occupancy fees during the interim period. Buyers who aren't prepared for these costs can face significant financial strain at closing — often 3–5 years after signing.

Here is every closing cost category, explained plainly, with approximate amounts for a $700,000 pre-construction condo in Toronto in 2026.

1. Land Transfer Tax (LTT)

Ontario charges provincial land transfer tax on all property purchases. Toronto adds a municipal land transfer tax on top. Rates are progressive (higher percentages on higher values).

2. HST (Harmonized Sales Tax)

New homes in Ontario are subject to 13% HST. However, there is a Federal New Housing HST Rebate and an Ontario New Housing Rebate that significantly reduce the actual HST payable — if you're buying as a primary residence.

If the home is your primary residence: The builder typically prices new condos and homes with the HST rebate already embedded in the purchase price (meaning you see the net-of-rebate price). You assign your rebate to the builder at closing. You should confirm this with your lawyer for your specific purchase.

If you're buying as an investment/rental: You do not qualify for the primary residence rebate. The HST (approximately $91,000 on a $700,000 purchase) must be paid at closing — though you can file to recover it through the CRA rental property HST rebate if the unit is rented immediately. This is a significant cashflow consideration for investors.

3. Development Charge Adjustments

Municipal development charges (DCs) are fees the City charges builders for new development — and builders pass them on to buyers. Here's the problem: DCs are typically charged at the rate at the time of occupancy, not the rate at the time of signing — and they increase regularly.

If you signed in 2022 and close in 2026, you pay 2026 DC rates, which may be significantly higher. Development charges in Toronto can exceed $100,000 per unit for a high-rise condo. This is one of the most significant and underestimated closing costs in pre-construction.

At platinum VIP launch, builders often offer capped development charges as an incentive — meaning the builder absorbs any DC increase above a fixed cap. Always ask if DC cap is included, and have your lawyer confirm it in the APS.

4. Tarion Enrollment Fee

All new homes in Ontario are enrolled in the Tarion new home warranty program. The builder pays a registration fee, but typically charges it back to the buyer as an adjustment at closing. Tarion fees are based on the purchase price — approximately $1,000–$2,000 for a $700,000 home.

5. Legal Fees and Disbursements

You need a real estate lawyer for both APS review at signing and the final closing. Expect $2,000–$3,500 in total legal fees for a pre-construction purchase. Title insurance is typically included in disbursements.

6. Utility Connections and Closing Adjustments

At final closing, the builder presents a statement of adjustments — a list of additional costs charged to the buyer. These can include: meter installation, hydro connection, utility hookups, common area costs, and occupancy period interest adjustments. These vary widely by project and builder, but budgeting $2,000–$10,000 for miscellaneous adjustments is prudent.

Summary: Budget for Closing Costs

The range is wide because development charges vary so significantly by municipality, building type, and timing. Always ask your agent and lawyer for a closing cost estimate specific to your project before signing.