Quick answer: Beyond your deposit and mortgage, closing a pre-construction home in Ontario usually involves the costs below. The single most important protection is a written cap on development charges and levies, negotiated before your cooling-off period ends.
- Land transfer tax (first-time buyers get up to $4,000 back)
- Development charges and levies passed on by the builder
- The Tarion enrolment fee
- Utility and meter connection fees
- Legal fees and title insurance
- Adjustments for property tax and condo fees
- For condos, interim occupancy fees and a reserve fund contribution
Most pre-construction buyers budget for the price and the deposits. The surprise comes on closing day, when the statement of adjustments arrives with thousands of dollars in charges they never saw coming. Almost all of those charges are written into the agreement of purchase and sale (APS) you sign years earlier, which means you can see them, and often limit them, in advance.
What are the closing costs on a new construction home in Ontario?
1. Land transfer tax (LTT)
Ontario's land transfer tax applies when the title transfers to you at final closing. For a home with one or two single-family residences, the rates are:
| Portion of price | Rate |
|---|---|
| First $55,000 | 0.5% |
| $55,000 – $250,000 | 1.0% |
| $250,000 – $400,000 | 1.5% |
| $400,000 – $2,000,000 | 2.0% |
| Over $2,000,000 | 2.5% |
On a $700,000 home, that's about $10,475. First-time buyers can get a rebate of up to $4,000. In the City of Toronto, a second, municipal land transfer tax applies, with its own first-time buyer rebate of up to $4,475.
2. Development charges and levies (the big one)
Municipalities charge builders development charges to fund roads, water, schools and transit. Builders often pass part of these on to buyers, along with other levies: education development charges, parkland levies, and any increases in charges that happen between signing and closing.
The risk: If your APS doesn't cap these charges, your cost is unknown until closing. Uncapped levies are the most common source of closing-day shock in Ontario pre-construction.
What to do: Ask for a hard dollar cap on all development charges, levies and education charges combined, written into the APS. In 2026's buyer-friendly market, many builders are offering capped or even waived levies as an incentive, so ask.
3. HST: usually included, but check the fine print
Most new home prices in Ontario include HST net of rebates you assign to the builder. In 2026, that rebate can be worth up to $130,000. If you don't qualify, you pay the difference at closing. This is covered in detail in our Ontario HST rebate guide.
Also check whether HST is charged on top of your upgrades and extras. It often is.
4. Tarion enrolment fee
Every new home in Ontario must be enrolled in Tarion's warranty program. The fee scales with the purchase price, and builders usually charge it back to you as an adjustment. In exchange, you get deposit protection, delayed-closing compensation and the 1-, 2- and 7-year warranties.
5. Utility, meter and connection fees
Hydro, water and gas meter installation, utility hookups, and sometimes sod, paving, tree planting or fencing charges. These are usually listed in a schedule to your APS. Look for fixed amounts, not "the builder's actual cost."
6. Legal fees, title insurance and lender costs
New builds take more legal work than resale. Your lawyer reviews the APS, handles occupancy (for condos), final closing and the rebate assignment. Budget for legal fees, title insurance, and, if your down payment is under 20%, the 8% Ontario PST on your mortgage default insurance premium. That PST is due in cash at closing and can't be added to the mortgage.
7. Adjustments
The builder may have prepaid property taxes or other costs that get prorated to you on the statement of adjustments. Some APSs also include a property tax holdback, because new homes haven't been assessed yet.
Extra closing costs for pre-construction condos
Condo buyers face two closing stages, and costs at each.
Interim occupancy fees
You usually move in (occupancy) months before the building is registered and you actually own the unit (final closing). During this interim occupancy period, you pay the builder a monthly fee based on:
- Interest on the unpaid balance of your purchase price
- Estimated monthly common expenses (condo fees)
- Estimated property taxes
It's essentially rent. None of it goes toward your purchase price. Interim occupancy can last a few months or more than a year, so budget for it on top of your old rent or mortgage if the dates overlap.
Reserve fund / working capital contribution
Most condo APSs require a one-time contribution to the condo corporation's reserve or working capital fund, commonly equal to about two months of common expenses.
Status certificate and other condo-specific charges
Watch for charges for parking or locker transfers, the condo corporation's registration, and any "builder's legal fees for registration" listed in the schedule.
Worked example: $700,000 freehold townhome, first-time buyer
Illustrative only. Actual amounts depend on your municipality and APS.
| Closing cost | Estimate |
|---|---|
| Ontario land transfer tax | $10,475 |
| Less first-time buyer LTT rebate | −$4,000 |
| Development charges & levies (capped in APS) | $10,000 |
| Tarion enrolment fee | ~$1,500 |
| Utility & meter connections | ~$1,500 |
| Legal fees & title insurance | ~$2,500 |
| Tax & other adjustments | ~$1,000 |
| Estimated total | ~$23,000 |
Now imagine the same deal with no cap on development charges. That $10,000 line could be several times higher, and you'd only find out at closing. One clause changes the whole picture.
What should I negotiate before signing?
- ☐ A hard dollar cap on development charges, levies and education charges
- ☐ Fixed amounts for utility and meter connections, not "actual cost"
- ☐ Clarity on HST: included net of which rebates, and what you owe if you don't qualify
- ☐ Assignment fee and legal fees, in case you need to sell before closing
- ☐ For condos, the estimated occupancy fee and expected length of interim occupancy
- ☐ Free or reduced upgrades, often easier to win than a price drop
Related reading: Pre-Construction Deposits in Ontario · Ontario HST Rebate on New Homes
Frequently asked questions
How much are closing costs on a pre-construction home in Ontario?
It depends mostly on land transfer tax and whether development charges are capped. On a $700,000 freehold home with capped levies, total closing costs can be in the low-to-mid $20,000s. Uncapped levies can push that much higher.
What is a development charge cap?
A clause in your agreement that sets the maximum amount of municipal development charges, levies and education charges the builder can pass on to you at closing. Without a cap, the amount is unlimited.
Do first-time buyers pay land transfer tax on new construction?
Yes, but first-time buyers in Ontario can get a provincial rebate of up to $4,000. Buyers in the City of Toronto can also get up to $4,475 off the municipal land transfer tax.
What are interim occupancy fees?
Monthly fees a condo buyer pays the builder between moving in and the building's registration. They cover interest on the unpaid balance, estimated condo fees and estimated property taxes, and don't go toward the purchase price.
Are closing costs higher for new construction than resale?
Usually, yes. New homes add development charges, Tarion enrolment, utility connections and, for condos, occupancy fees and reserve contributions. Resale buyers don't pay these.
When are pre-construction closing costs paid?
At final closing, through your lawyer. Condo buyers also pay the first month's occupancy fee and some adjustments at occupancy.
About the author: Ola Otubu is a REALTOR® with Realty ONE Group Reveal, Real Estate Brokerage, and the founder of Buyprecon.ca. He represents buyers of new construction homes and condos across Ontario, from the first deposit through PDI, closing and warranty claims.
This article is general information, not legal or tax advice. Figures are illustrative; actual closing costs depend on your municipality, lender and agreement of purchase and sale. Sources: Government of Ontario; Tarion; City of Toronto.
Not sure what your agreement actually says?
Send me the APS schedules for the project you're considering, and I'll flag every closing cost, what's capped, and what isn't, before your cooling-off period ends. There's no cost to you as a buyer.