One way to help facilitate a smooth closing after you have purchased a condo is to budget for the closing costs. Every closing as specific expenses that relate to the purchase of the property, including applicable taxes and legal fees.
Last week, we looked at the down payment and legal expenses. This week, we will examine the taxes you are required to pay upon closing.
Understanding the breakdown of your final closing costs can be confusing. It's best to consult a real estate lawyer to help you understand the different amounts and how they are applied. As outlined on the New In Homes website, there are a couple of different taxes associated with purchasing a condominium in Ontario.
- What Are HST costs? The Harmonized Sales Tax applies to new builds in Ontario. It is applied to the purchase price of your home. It contains a 5% federal tax, and an 8% provincial tax.
- What Is A Land Transfer Tax? Once the transfer of land from the builder to you is registered with the province, you will have to pay a land transfer tax. If you a first-time home buyer, you may be able to receive a refund for this payment.
- What Are Property Taxes? A property tax is applied by the provincial government to help fund local services, such as schools. The total is based on the land value of which your new home resides. This total is often reassessed on a yearly basis.
It's important to understand the expenses associated with your closing fees so you can budget yourself accordingly. This will also help you avoid any surprises when you make your final payments on the closing date. If you do have questions, or need clarification on how these costs apply to your transaction, consult a legal professional.