When thinking about purchasing, it's important to consider all the costs and expenses upfront! Not only do you need enough to cover the purchase price (down payment + mortgage) but closing costs as well. I recommend using handy online calculators, but let's break down the most important items you'll need to consider.
How Much Are Closing Costs in the GTA?
1) Lawyer Fees
When you buy or sell real estate in the GTA, you will need to work with a real estate lawyer. The cost for lawyers varies, however for a standard purchase you can budget about $1500-$2000 to go to the lawyers on closing day. You can read more about what a lawyer does here.
2) Land Transfer Tax
This is by far your biggest closing cost when buying a home. In Ontario, we have a provincial land transfer tax, and in the City of Toronto we have a municipal one as well. Basically, if you buy within the City of Toronto borders, you pay double (thank you Toronto!). If you purchase a home in the GTA (Mississauga, Burlington, Oakville, Ajax, Milton, Pickering etc) you only pay once. Land Transfer Tax is calculated based on the purchase price, and there is a one time rebate available for first time home buyers, of up to $8475 in Toronto, and $4000 in the GTA. This amount is taken off of the total tax owed, and can be used once on your first property.
If you are buying a property with someone else that is also a first time buyer, you both can claim the rebate ($16,950). If you buy with someone that is not a first time buyer, you can only claim half if it's 50/50 ownership, or 99% of the rebate if the ownership is 99/1 (other party owns 1%). Another thing to note is that if you are buying an investment property for your first home, the rebate is not available to you, and you'll never have a chance at it again!
Here is an example:
Sale Price - $800,000
Location - Toronto
Land Transfer Tax - $24,950
Minus First Time Home Buyer Rebate of $8475
Total Owed for LTT = $16,475
This means you'll want to have $16,475 set aside for land transfer tax if you're purchasing a property for $800,000 and are a first time home buyer. Once you know your total budget, your realtor will be able to calculate the amount you'll owe for land transfer tax.
3) Moving Expenses
Another important consideration for your closing costs is your moving expenses. This can vary greatly depending on your needs. Whether you use a uhaul, or professional moving services, be sure to get some quotes and budget for the move ahead of time!
4) Utility Hookup Fees
If you move into a new home that requires utility hookups like gas, hydro, water, or garbage pick up, you may have to pay one time fees to get these set up. They are typically minor in nature, but good to keep in mind!
While these are the most common closing costs, keep some additional funds set aside for any surprises. If you have questions about closing costs or rebates, don't hesitate to book a call with me so that we can discuss further!
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