Pre-Construction Closing Costs in Ontario: Complete 2026 Guide

Updated September 5, 2026

You found the right pre-construction home, paid your deposits and secured your mortgage.

Then closing approaches—and suddenly there are thousands of dollars of expenses that were not part of the advertised builder price.

This is why understanding pre-construction closing costs in Ontario is just as important as understanding your purchase price and deposit structure.

Depending on the property, municipality and Agreement of Purchase and Sale, closing costs can include:

Tarion recommends that pre-construction buyers budget carefully for closing expenses and notes that one-time closing costs can range approximately 1.5% to 4% of the purchase price, depending on the transaction.

That means a buyer purchasing an $800,000 home should not assume that having exactly enough for the down payment is enough to close.

Let’s break down what Ontario buyers need to know in 2026.

What Are Closing Costs on a Pre-Construction Home?

Closing costs are amounts you pay in addition to the purchase price and deposit when ownership of your home is transferred to you.

Some expenses are government taxes.

Others are legal or financing costs.

And some are builder adjustments created by the terms of your Agreement of Purchase and Sale.

This last category is especially important with pre-construction.

A resale Agreement of Purchase and Sale may be relatively straightforward.

A builder agreement can contain dozens of pages of schedules describing additional adjustments, levies, fees and purchaser obligations.

That’s why your purchase agreement should be reviewed by a real-estate lawyer familiar with new-construction transactions before the applicable review period expires.

1. Ontario Land Transfer Tax

One of the largest closing expenses for most buyers is the Ontario Land Transfer Tax (LTT).

Ontario calculates LTT using graduated tax rates.

For residential property containing one or two single-family residences, the current provincial rates are:

Ontario Land Transfer Tax Examples

For illustration:

$700,000 purchase

Approximate Ontario LTT:

$10,475

$800,000 purchase

Approximate Ontario LTT:

$12,475

$1,000,000 purchase

Approximate Ontario LTT:

$16,475

These examples assume an ordinary residential purchase and do not account for first-time-buyer refunds or special circumstances.

2. First-Time Home Buyers Can Receive an Ontario LTT Refund

Eligible first-time home buyers may receive an Ontario Land Transfer Tax refund of up to:

$4,000

For qualifying transfers registered on or after January 1, 2017, Ontario’s maximum first-time homebuyer LTT refund remains $4,000.

That means an eligible first-time buyer purchasing an $800,000 home with approximately $12,475 in provincial LTT could potentially reduce that amount by $4,000.

Approximate provincial LTT after the maximum refund:

$8,475

Eligibility rules apply, including requirements involving age, prior homeownership, residency and citizenship/permanent-resident status.

The refund should not be assumed until your lawyer confirms your eligibility.

3. Buying in Toronto? You May Pay Land Transfer Tax Twice

If your property is located within the City of Toronto, buyers generally pay:

Ontario Land Transfer Tax

plus

Toronto Municipal Land Transfer Tax (MLTT)

For homes up to $2 million, Toronto’s basic rate structure closely follows the provincial structure:

Toronto introduced significantly higher graduated rates for high-value residential properties effective April 1, 2026.

For qualifying residential properties:

Those higher rates apply only to the applicable portion of value within each bracket, not to the entire purchase price.

Toronto Land Transfer Tax Example

Consider an $800,000 property in Toronto.

Approximate Ontario LTT:

$12,475

Approximate Toronto MLTT:

$12,475

Combined:

Approximately $24,950

That is before considering any first-time-homebuyer refunds.

This is one of the most important differences when comparing a property in Toronto with a similarly priced home in Vaughan, Mississauga, Oakville, Caledon, Hamilton, Niagara or elsewhere in Ontario.

Toronto First-Time Buyer Rebate

Toronto also offers an eligible first-time purchaser a municipal land-transfer-tax rebate of up to:

$4,475

Combined with Ontario’s maximum $4,000 refund, an eligible first-time buyer purchasing in Toronto could potentially receive up to:

$8,475

in combined provincial and municipal LTT refunds.

Eligibility rules must still be satisfied.

4. Builder Adjustments Can Be One of the Biggest Surprises

This is where pre-construction differs significantly from resale.

Builder Agreements of Purchase and Sale often allow the builder to recover certain costs from purchasers on closing through a Statement of Adjustments.

Potential adjustments can include items such as:

Not every builder charges all of these items.

And not every charge will be uncapped.

The Agreement of Purchase and Sale determines what the builder can charge.

5. Capped Development Charges Can Be Extremely Valuable

You’ve probably seen builder promotions saying something like:

“Development Charges Capped”

or

“Levies Capped at $10,000.”

This can be more valuable than it initially sounds.

Municipal development charges help fund infrastructure needed for growth, such as roads, water and wastewater infrastructure and other municipal services.

With pre-construction, years can pass between signing your purchase agreement and final closing.

If your agreement allows certain increases to be passed to you, the amount due at closing could be greater than you expected.

A cap limits the amount the builder can charge you under that particular adjustment provision.

For example:

If the APS allows development-related adjustments but caps the purchaser’s exposure at:

$10,000

then the buyer has more certainty than someone whose agreement leaves applicable increases uncapped.

Never assume “capped” means “free.”

It means the charge is limited according to the wording of your agreement.

This is why your lawyer should identify:

6. Legal Fees and Disbursements

You’ll need a real-estate lawyer to complete your purchase.

Legal closing expenses can include:

There is no government-mandated flat legal fee for an Ontario real-estate closing.

Different firms charge differently, and a pre-construction purchase can involve additional work compared with a straightforward resale transaction.

Instead of relying on a generic online estimate, ask the lawyer handling your transaction for a written quote showing:

Legal fee + disbursements + HST + title insurance + any additional new-construction charges.

Tarion specifically identifies legal fees, title insurance, appraisal costs and related expenses among the costs buyers should anticipate around closing.

7. Title Insurance

Most Ontario residential transactions include title insurance.

Title insurance can protect against certain title-related problems such as:

Coverage varies by policy.

The cost depends on factors such as property value and the insurer.

Your lawyer will normally explain the applicable title-insurance premium as part of the closing process.

8. Property Tax Adjustments

Property taxes are usually adjusted between the buyer and seller—or builder—on closing.

Suppose the builder has already paid property taxes covering a period extending beyond your closing date.

You may need to reimburse the builder for your share after you take ownership.

Conversely, other adjustments can work in the purchaser’s favour.

Your lawyer calculates these amounts through the Statement of Adjustments.

With a newly built property, tax assessment can sometimes lag behind completion, so buyers should also understand that future property-tax bills may change once the completed home is fully assessed.

9. Tarion: Understand What You’re Actually Paying For

New homes in Ontario are covered by the province’s new-home warranty framework.

The warranty is provided by the builder and backed by Tarion.

Tarion maintains an enrolment-fee schedule based on the new home’s sale price.

However, this needs to be explained carefully:

Tarion states that the enrolment fee is payable by the vendor.

Therefore, buyers should not assume that a Tarion enrolment fee appearing in an online closing-cost calculator is automatically a direct government charge payable by the purchaser.

Instead, review your builder’s APS and Statement of Adjustments to determine whether and how warranty-related costs are treated in your particular transaction.

Tarion’s current fee schedule also defines sale price broadly for enrolment purposes, including upgrades, extras, parking spaces and storage lockers, excluding applicable taxes.

10. New 2026 Tarion Registration Requirement for Freehold Buyers

There’s also an important procedural change for 2026.

Starting April 1, 2026, purchasers of new freehold homes are required to provide notice of their purchase to Tarion within:

45 days of entering into the Agreement of Purchase and Sale.

Tarion says providing this notice is free.

This isn’t technically a closing cost, but it’s an important new-home-purchase requirement buyers should know about.

11. HST Can Dramatically Affect the Closing Calculation

Ontario HST is:

13%

comprising:

Newly constructed homes are generally subject to HST.

But how HST appears in your transaction depends on:

This is an area where buyers should be especially careful in 2026 because new federal and Ontario rebate programs have substantially changed the potential amounts.

12. Ontario’s Enhanced HST Rebate Can Reduce Costs Significantly

Ontario’s temporary Enhanced New Housing Rebate (ENHR) can allow an eligible purchaser to recover up to:

$80,000

of the provincial portion of HST.

For a typical home purchased from a builder, the qualifying Agreement of Purchase and Sale generally needs to be entered into between:

April 1, 2026 and March 31, 2027.

Qualifying purchasers may also be eligible for the Ontario New Home Affordability Payment (ONHAP), which can provide relief equivalent to as much as:

$50,000

of the 5% federal portion, subject to the applicable rules and interaction with other rebates.

That means eligible purchasers may potentially receive combined HST relief of as much as:

$130,000

But this is not an automatic $130,000 closing credit for every new-home buyer.

Eligibility must be confirmed.

13. First-Time Buyers Have Additional HST Opportunities

The federal First-Time Home Buyers’ GST/HST Rebate can provide eligible first-time purchasers with:

100% of the 5% federal portion on qualifying new homes valued up to $1 million, up to a maximum rebate of:

$50,000

The rebate is gradually reduced for qualifying homes valued between:

$1 million and $1.5 million

and disappears at $1.5 million.

Ontario also has corresponding enhanced provincial relief for eligible first-time purchasers.

Because several programs now overlap, the safest approach is to have your lawyer and, when appropriate, tax professional determine which rebate applies to your transaction.

14. What If You’re Buying the Property as an Investment?

Investor HST treatment can be different.

The ordinary owner-occupied new-housing rebate generally requires the property to be acquired for use as the primary place of residence of the purchaser or qualifying relation.

CRA’s GST190 builder-purchase form specifically states that the home must be intended as the primary residence of the purchaser or relation and not as a rental property.

Long-term rental properties may instead qualify under the New Residential Rental Property Rebate rules, depending on the circumstances.

Investors should therefore not assume that an owner-occupant rebate shown in builder marketing will automatically apply to them.

HST can create a significant cash requirement at closing when a builder cannot credit the rebate in the same way as an owner-occupied purchase.

15. Interim Occupancy Costs for Condominiums

Condominium buyers may experience interim occupancy.

This happens when your unit is ready for occupancy but the condominium corporation has not yet been registered.

You can move in—but you don’t yet own the unit.

During this period, buyers typically pay the builder an occupancy fee.

The fee can generally include components relating to:

You generally do not begin your traditional mortgage until final closing because title has not yet transferred.

Interim occupancy can last weeks or months depending on the project.

This means condo buyers need to budget differently from freehold buyers.

16. Condominium Common-Expense Adjustments

At final closing, condominium purchasers may also see adjustments related to:

Your APS and disclosure statement should be reviewed carefully.

The monthly maintenance fee advertised when you originally purchased may also differ from the amount ultimately established after the condominium begins operating.

17. Utility Connections, Meters and Other Builder Charges

Some builder agreements permit charges relating to utility installation or setup.

Depending on the agreement, this could involve items connected with:

Never assume these expenses are standardized across builders.

They aren’t.

One builder may absorb an expense.

Another may cap it.

Another agreement may permit a different adjustment.

Again, the APS controls the transaction.

18. Mortgage-Related Closing Costs

Your lender may also require expenses such as:

Mortgage default insurance isn’t necessarily paid as a large cash expense at closing because premiums are often added to the mortgage principal, but applicable provincial tax on the premium can create a closing cash requirement.

Your mortgage professional and lawyer should give you the exact amounts before closing.

19. Non-Resident Buyers Need to Be Particularly Careful

Ontario’s Non-Resident Speculation Tax (NRST) is currently:

25%

and applies provincewide to certain residential purchases involving foreign nationals, foreign corporations and taxable trustees.

Toronto also imposes a separate Municipal Non-Resident Speculation Tax (MNRST) of:

10%

on certain residential purchases by foreign buyers.

It applies in addition to Toronto’s regular Municipal Land Transfer Tax.

These taxes can dramatically change the funds required to close.

Foreign purchasers should obtain legal and tax advice before entering into an Agreement of Purchase and Sale.

How Much Should You Budget for Pre-Construction Closing Costs?

There isn’t one percentage that works for every buyer.

Tarion suggests buyers should expect total closing expenses approximately in the range of:

1.5% to 4% of the purchase price

depending on the transaction.

For planning purposes, that could represent:

These are budgeting illustrations, not quotations.

A Toronto purchase, an investor purchase, a condominium with interim occupancy, an agreement containing uncapped adjustments or a transaction involving non-resident taxes can produce very different results.

Example: Buying an $800,000 Pre-Construction Home Outside Toronto

Suppose you purchase a new freehold home in an Ontario municipality outside Toronto for:

$800,000

Your potential closing expenses could include:

Ontario Land Transfer Tax

Approximately:

$12,475

If you’re an eligible first-time homebuyer, the maximum Ontario refund could reduce this by:

$4,000

resulting in approximately:

$8,475

Legal and title-related expenses

Variable depending on your lawyer and transaction.

Builder adjustments

Depends entirely on the APS.

Mortgage/appraisal costs

Depends on your lender.

Property tax adjustments

Depends on the closing date and amounts already paid.

HST

Depends on how the purchase price and available rebates are structured.

This example shows why simply telling buyers to “budget 2%” isn’t always sufficient.

Example: Buying an $800,000 Pre-Construction Condo in Toronto

Now compare the same purchase price inside Toronto.

Approximate provincial LTT:

$12,475

Approximate Toronto MLTT:

$12,475

Total before rebates:

$24,950

An eligible first-time buyer could potentially receive up to:

$4,000 Ontario refund

plus

$4,475 Toronto rebate

potentially reducing combined LTT by:

$8,475

The buyer would still need to consider:

Location alone can therefore materially change closing costs.

The Most Important Document: Your Agreement of Purchase and Sale

If you remember only one thing from this guide, remember this:

Your builder’s advertised price does not tell you your complete cost.

The APS does.

During the lawyer-review period, ask your lawyer specifically:

Don’t limit the lawyer review to:

“Is the contract okay?”

Ask for the financial exposure to be explained.

How to Avoid Closing-Cost Surprises

Before buying a pre-construction home:

Get the APS reviewed by a real-estate lawyer

Preferably someone experienced with builder contracts.

Request the incentive package in writing

If development charges are capped, ensure the cap appears in the agreement or amendment.

Understand the advertised price

Ask whether HST and assumed rebates are already included.

Don’t spend your entire savings on the deposit

Keep additional liquidity for closing.

Arrange financing early

But remember that financing conditions can change before a future closing.

Review your Statement of Adjustments before closing

Your lawyer should explain significant charges.

Confirm HST eligibility

Especially under the new 2026 federal and Ontario programs.

Compare total cost—not just the purchase price

A $799,000 home with uncapped adjustments may not necessarily be cheaper than an $819,000 home with strong incentives and capped closing costs.

Frequently Asked Questions

How much are closing costs on a pre-construction home in Ontario?

There is no single amount. Tarion suggests buyers can expect closing-related costs broadly in the range of approximately 1.5% to 4% of purchase price, but individual transactions can be higher or lower.

Does my deposit cover closing costs?

No. Your deposit forms part of the purchase price. You still need separate funds to pay applicable land transfer taxes, legal expenses, adjustments and other closing costs.

Do first-time buyers pay land transfer tax in Ontario?

Yes, but eligible first-time buyers may receive a refund of up to $4,000 of Ontario LTT.

Do Toronto buyers pay two land transfer taxes?

Generally, yes. Toronto buyers are subject to Ontario Land Transfer Tax as well as Toronto Municipal Land Transfer Tax.

How much can a Toronto first-time buyer receive back?

An eligible first-time buyer may qualify for up to $4,000 from Ontario and up to $4,475 from Toronto, for potential combined LTT relief of up to $8,475.

Do I have to pay HST on a pre-construction home?

New housing is generally subject to HST, but builder pricing and applicable rebates can significantly affect how the HST appears in your transaction. Eligible buyers may qualify for federal and/or Ontario housing rebates.

Can I get up to $130,000 in HST relief?

Potentially, under Ontario’s new 2026 enhanced programs and/or applicable federal first-time-buyer programs, depending on the transaction. It is not automatic and eligibility should be confirmed before relying on the amount.

What does “development charges capped” mean?

It means the builder has contractually limited specified development-related charges to a particular amount. The exact protection depends on the wording of the APS.

Are closing costs negotiable with builders?

Sometimes a builder promotion may cap, waive or credit certain closing adjustments. Government taxes such as land transfer tax themselves are not negotiated with the builder, although statutory rebates may apply.

Bottom Line: Budget Beyond the Builder Price

One of the biggest mistakes a pre-construction buyer can make is focusing on only two numbers:

Purchase price + deposit.

Your actual financial plan should consider:

Purchase Price

Today’s Ontario pre-construction market can offer attractive pricing, builder incentives and substantial HST relief.

But an incentive isn’t valuable if unexpected closing costs erase the savings.

The best time to understand your closing costs is before you sign the deal—not a week before you receive your keys.

Looking for a New Home in Ontario?

At New Home Source, we help buyers compare more than just advertised builder prices.

We can help you explore current pre-construction, new-construction and inventory-home opportunities across Ontario, including available pricing, deposit structures, builder incentives, closing timelines and capped closing-cost programs where offered.

Whether you’re searching for a townhome, semi-detached or detached home, understanding the complete purchase structure can help you make a more informed decision.

Planning to buy a new home in Ontario? Contact New Home Source to explore current opportunities and builder incentives available today.

Disclaimer: This article is provided for general informational and real-estate marketing purposes only and does not constitute legal, tax, accounting, mortgage or financial advice. Closing costs vary significantly based on the municipality, property, purchaser, builder agreement and financing arrangements. Government taxes, rebate programs and builder policies may change. Buyers should have their Agreement of Purchase and Sale reviewed by a qualified Ontario real-estate lawyer and obtain appropriate tax and financing advice before relying on any estimated amount.