23 September

Buying a pre-construction condo in Toronto

The Toronto market of pre-construction has bloomed over the years, so that if you are interested in purchasing a condominium this is the place to do it. Besides the fabulous location, buying a pre-construction condominium in Canada can have many advantages, as long as you are prepared financially and spiritually to make an investment. When buying a home that is in the preconstruction phase, it is important to pay attention to specific details such as budget and new home tax rebate. If you do not have anyone to guide you through the process, then you should take into consideration the following facts.

The initial deposit

The purchase of new condos is slightly different from the purchase of resale condos. The main difference is that for a resale condo you are required to pay a deposit of only 5% when signing the agreement, while for new residences you will have to pay as high as 20%. The reason is that builders need to finance the construction project and thus people have to pay higher deposits. Initially, the buyer has to pay a fixed sum of 3000$ and the deposit is due within 10 or 15 days following the signing of the agreement. Most times, the payment of the deposit is scheduled according to the phases of the construction. The conclusion is that you should verify the deposit structure so as to make sure if you can handle it from a financial point of view.

Reconsidering the purchase and occupancy period

Buyers of new condos are given the possibility to change their minds and to reconsider the purchase. However, this applies only to the first ten days following the purchase, which means that they are not bound by the contract anymore and they can get their deposit back. On the other hand, if you do decide the condo is what you need, then you can move into it right away. Attention should be paid to the fact that this period is considered the interim occupancy period, in other words, you don’t really own the residence and you have to pay the builder a sum equal to a mortgage. The reason for this is that no transfer of land has occurred yet.

Closing costs

Only after the unit has been registered officially, can you close the purchase. Upon closing the purchase, you will also be responsible for certain costs. More precisely, all construction costs include development and educational costs, HST and fees related to utility connection. All these expenses can be as high as 3% of the original purchase.


Compared to resale condos, new ones are all subject to HST. HST stands for Harmonized Sales Tax and it is included in the price of every condo that is sold. HST allows builders to market the residences at a lower price and they afterwards claim the refund on the behalf of the buyer. Only buyers that purchase the condo and use it as a primary residence are eligible for HST rebate. However, this intention matters only at the moment of the transaction. Additionally, those who desire to rent the condo can receive HST refund. This means that investors have to use a different program in order to get their money back.