Revised: July 2026 (note: HST on preconstruction properties is changing frequently, check in with us for the latest information on HST). 

Buying a pre-construction condo comes with real advantages. You get modern finishes, a deposit structure spread out over years, and the chance to lock in today’s price for a home that closes years from now. But it’s critical to prepare for your final out-of-pocket costs on closing day. Most buyers budget for the purchase price and deposits, only to be caught off guard by the adjustments that show up on their final statement of account.

Here are the six most overlooked costs to budget for when buying pre-construction

1. Land Transfer Tax, Development Levies and Utility Hookups

Land transfer tax is one of the most widely known closing fee in real estate, but some buyers aren’t familiar with the fact homes in the city of Toronto are subject to two land transfer taxes.

Municipalities charge builders levies to fund local infrastructure. That includes roads, sewers, schools, parks, and even planting trees. When the project is proposed to the city, the city quotes the developer on the total development levies. However, between the first proposal, and the final construction, development costs always go up. The excess fees are then passed onto the buyers. Most developers do put a maximum cap on those development fees, and if you don’t have one, a good agent and lawyer would negotiate one into your contract before it goes firm.

Utility hook-ups can add up to a few thousand dollars on new condos and homes as well.

2. The HST Rebate: What’s Different in 2026

HST regulations are changing rapidly. This is what is currently the case as of July 30, 2026.

Homes purchased between April 1 2026 and March 31, 2027, may be eligible to have up to $130,000 of the HST removed from the cost of the home. Now, to receive the potential $130,000, the properties must be completed and closed within a couple years (2029 for rentals, and 2031 for owner-occupied residences).

 Read more about it here.

Before this HST project was launched, this is how HST was treated:

• The builder’s purchase price included HST
• The advertised price is inclusive of one of two available rebates, one rebate for end-users, and one rebate for investors.
• If you were an end-user, the builder would usually just charge you the advertised marketing price, and they will claim the HST rebate on your behalf.
• If you were an investor, the builder will collect the equivalent HST charge of the investor rebate. That would be around $24,000 for most homes. It is then your prerogative to lease the property out and apply for the HST rebate on your own.
• There are very specific rules to follow to receive these HST rebates, and there are some scenarios where you might lose eligibility for either of them, so work closely with a specialized realtor and a trusted accountant.

3. Tarion New Home Warranty Costs

In Ontario, new homes and condos are backed by Tarion’s statutory new home warranty. The enrolment fee that funds this program is charged to the builder, but in practice, many builder contracts pass all of this cost through to the buyer as a closing adjustment. Depending on your unit’s purchase price, this fee is typically in the four-figure range.

A $1,000,000 home carries over a $2,500 tarion fee. You can see the current tarion fees as of 2026 here. 

4. “Nickel and Dime” Builder Adjustments

Even with development levies capped, most agreements of purchase and sale include several smaller administrative charges layered on top. Common ones to watch for:

• Reserve fund contribution. A one-time charge, often equal to about two months of condo maintenance fees, used to help seed the building’s reserve fund.
• Discharge fees. A charge to clear the builder’s construction financing registered against your unit, this is typically a few hundred dollars
• Administrative and cheque-processing fees. Charges for processing each deposit cheque (often in the $75–$100 range per cheque) or the builder’s lawyer’s discharge fees.
• Late fees. Miss a payment, or submit your design choices late? there’s likely a fine outlined in the original agreement of purchase and sale which is payable.

5. Interim Occupancy Rent For Preconstruction Condos

Pre-construction condos have two separate closing dates:

1. 1. Occupancy closing is when you get the keys and move in.
   2. Final closing is when the building is legally registered, title transfers into your name, and your mortgage officially begins.

Between those two dates you pay the builder a monthly “interim occupancy fee.” This is not a mortgage payment and builds you no equity. It generally covers estimated interest on the unpaid balance of your purchase price, estimated monthly maintenance fees, and estimated property taxes. Unfortunately, the interest on the balance of the purchase price which the builder charges during interim occupancy is based on the 1-year lending rate from most major banks; as of 2026, that can be as high as 6%. So many buyers are surprised when their monthly interim occupancy fees are significantly higher than what their eventual carrying costs will be once they get their own mortgage.

A second thing that peeves us off about the interim occupancy fee: Builders assess taxes at 1% of the purchase price, meanwhile the municipality will only tax you at 0.8-0.85% of the assessed value. The assessed value is also prorated to the effective value of the property in 2016, since we haven’t had a re-assessment (and we won’t). That means the builder collects significantly more “tax” for their interim occupancy rent than they will remit to the city.

6. Assignment Fees and Restrictions

If there’s any chance you’ll want to sell your contract (assign it) before final closing, tell your Realtor and lawyer immediately so an assignment clause is negotiated into your agreement from the start, it’s far harder to add one later. Even with that clause in place, builders typically restrict when an assignment can happen, often requiring that 80–90% of the building’s units be sold first.

On top of the restriction, expect an assignment fee from the builder plus legal processing fees, which combined can range anywhere from roughly $1,500 to $5,000 or more depending on the builder and building.

Protecting Your Investment

The sales representatives in a builder’s presentation centre work for the developer, not for you. An experienced buyer’s agent and a real estate lawyer who specializes in pre-construction can help you negotiate proper caps, flag the fees hiding in the fine print, and give you a realistic estimate of your true out-of-pocket total, so closing day doesn’t come with any surprises.

If you’re considering a pre-construction purchase, contact us today, we’d be happy to walk through a specific building’s contract with you before you sign.