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HST rebate, deposit structure, occupancy fees, levies, and the true total cost of buying pre-con in Toronto.
Pre-construction condos can offer strong appreciation potential — but they come with significant risks and costs that resale buyers never face. Development levies, HST, occupancy fees, and closing cost surprises can add $50,000–$80,000 to your purchase price. Here's everything you need to know before signing a pre-con Agreement of Purchase and Sale (APS).
A typical Toronto pre-construction project takes 4–7 years from launch to occupancy. Here's the typical sequence:
New construction condos in Ontario are subject to 13% HST. This is typically built into the purchase price by developers, who claim it on your behalf. However, the HST treatment depends on your intended use:
Personal use / primary residence: You qualify for the New Home HST Rebate. The rebate is 36% of the 5% federal GST (max $6,300) + 75% of the 8% Ontario PST (max $24,000). Total maximum rebate = $30,300. This is almost always assigned to the developer, meaning the price you see already nets out the rebate.
Investment / rental property: You don't qualify for the rebate unless the first tenant occupies for at least 12 months (New Residential Rental Property Rebate applies). If you plan to flip or rent short-term, you'll owe the full HST. See our HST Rebate guide for full details.
Key charges to review in your APS: development charges, educational levies, section 37 contributions, meter installation, hydro connection, and utility activation. An experienced pre-construction lawyer ($2,000–$3,000) is essential to negotiate caps on these charges before signing.
Before final closing, you pay "occupancy fees" to the developer — essentially rent on your own unit. These are calculated as: (i) interest on the unpaid balance at a notional rate, plus (ii) property taxes, plus (iii) estimated maintenance fees. For a $750,000 unit with 200% deposit, occupancy fees typically run $2,500–$4,000/month and last 3–18 months.
During this period, you're not building equity — you're paying interest to a developer. This cost is often overlooked and can add $15,000–$50,000 to your effective purchase price.
If you purchase pre-con and want to sell before closing (an "assignment"), be aware: most developers require consent and charge an assignment fee (typically $3,000–$7,500). The profit on the assignment is taxable as business income if CRA considers you a builder/investor. See our Assignment Sale Ontario guide for the tax implications.
| Cost Type | Typical Amount (Toronto $750K unit) |
|---|---|
| HST (net of rebate, personal use) | $00 (built into price) |
| Development charges (capped) | $15,000–$30,000 |
| Occupancy fees (12 months) | $30,000–$48,000 |
| Provincial LTT | $12,475 |
| Municipal LTT | $11,225 |
| Legal fees (pre-con specialist) | $2,500–$4,000 |
| Total Extra Costs | $71,000–$105,000+ |
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