Essential Preparations and Estimated Closing Costs You Need to Know for Pre-Construction Completion and Closing!

2024-12-30

1. How to Set Up Utilities

When moving into a newly completed pre-construction property, you need to set up utility services. Below are the main services and how to set them up:

Electricity – Toronto Hydro (For other cities, contact the local electric company)

Website: Toronto Hydro

Procedure:

  • Go to the website and select “Open a New Account.”
  • Prepare the contract, ID, and move-in date, then register the account.
  • Set the service start date based on the closing date.

Gas – Enbridge Gas

Website: Enbridge Gas

Procedure:

  • Visit the “Start, Stop or Move Service” section on Enbridge Gas.
  • Enter the new address and personal information to create the account.
  • If the gas account hasn’t been opened, contact customer service directly.

Water – City of Toronto (For other cities, contact the local water company)

Website: City of Toronto Water Services

Procedure:

  • Set up the water account on the city’s website.
  • If the previous owner is registered, request a name change.
  • If the water account hasn’t been opened, contact customer service directly.

Internet & Cable

Main Providers: Bell, Rogers, Fido, etc.

Procedure: Compare the pricing plans of providers and schedule an installation date.

It’s recommended to align the internet installation with your move-in date.

Condo

Recently completed Toronto condos often have integrated utility management systems, such as Provident Energy Management, which manage electricity, gas, and water. In these cases, you don’t need to set up individual utility accounts; the service is provided through a single system.

The Condo Management will provide instructions on utility provider registration.

Once your utility account is set up, you may need to send a confirmation email to Condo Management to confirm your utilities are in place.

Tips:

  • Contact utility providers at least two weeks before closing to schedule services in advance.
  • After setting up, check the billing accounts for each service and set up automatic payments for convenience.

2. Costs to Pay at Completion

There are various costs involved at the time of pre-construction closing. Plan your finances accordingly. You can expect an additional 5% – 10% of the purchase price as completion costs.

1) Final Payment (Final Purchase Price)

  • Pay the remaining balance after deducting the deposit made at the time of purchase.
  • You can confirm the exact amount with your lawyer.

2) Land Transfer Tax

  • Ontario Provincial Land Transfer Tax:
    • Additional rates apply for purchase prices above $550,000.
  • Toronto Land Transfer Tax:
    • Toronto imposes a separate tax.
  • Use a Land Transfer Tax Calculator to estimate the amount.

First-Time Buyer Rebate:

  • First-time homebuyers can receive a rebate of up to $4,000 (up to $8,475 in Toronto).

3) Legal Fees

  • Typically $1,000 – $3,000 for documentation and title transfer.

4) Adjustments

  • Adjustments for property taxes, maintenance fees, or utilities that the developer has paid in advance, prorated based on your closing date.
    • Condo Fees: $300–$600 per month.
    • Property Tax: Around 1% of the purchase price.
    • Last month’s utility fees.

5) Other Costs

  • Title Insurance: $300 – $500.
  • Home Inspection (if needed): $1,000 – $2,000.

3. HST Applicability

HST (Harmonized Sales Tax) may apply to pre-construction purchases under certain conditions.

When HST Applies:

  • For Investment Purposes (Rental):
    • If you purchase a pre-construction condo for rental purposes, you must pay the full HST, and it is not eligible for rebate.
  • Non-Primary Residences:
    • If the property is not intended for personal use or the use of family members as a primary residence, you cannot claim the HST credit.

When HST Is Not Included in the Price:

  • If the developer hasn’t included HST in the price, you will need to pay it separately at closing.

When You Don’t Have to Pay HST:

  • Primary Residence (For Personal Use):
    • If you or immediate family will use the property as a primary residence, you can receive an HST rebate.
    • The government offers a rebate of up to $24,000.

HST-Inclusive Price:

  • Most pre-construction contracts include HST in the purchase price, so no additional payment is required.

HST Rebate Application:

  • You may be eligible for a partial HST rebate through the New Residential Rental Property Rebate.
  • To claim the rebate, a one-year lease agreement is required.
  • You can apply either through your lawyer or directly on the CRA website.

Before closing, review all costs with your lawyer and REOCA to avoid any unexpected issues.

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