Staring at floorplans and model suites while also scrolling resale listings? You are not alone. Buying a downtown condo means choosing between the certainty of resale and the promise of pre-construction, and both paths come with unique timelines, costs and risks. In this guide, you will learn how deposits, HST, interim occupancy, assignments, and warranties work, plus what documents to review before you sign. Let’s dive in.
Pre-construction vs resale at a glance
- Pre-construction: You are buying from plans and builder specs, with modern amenities and Tarion warranty coverage. Your timeline can run years from contract to move-in, with an interim occupancy period before legal closing.
- Resale: You can walk the unit, see light and finishes, and close in a predictable 30 to 90 days. You avoid HST on the purchase price in most typical resale cases.
- Key tradeoff: Pre-construction introduces construction and timing risk, tax complexity, and interim fees. Resale reduces those uncertainties but may involve older systems, potential maintenance and fewer warranties.
Deposits: how they differ
Pre-construction builders typically require larger, staged deposits that add up over time. In Toronto, schedules often total about 10 to 20 percent of the purchase price, commonly starting with 5 percent on signing and further installments at set dates. Some projects offer extended deposit programs, but terms vary by builder.
For resale, the deposit on offer acceptance is commonly around 5 percent of the price, held in a brokerage trust account and credited on closing. You should review whether any financing conditions apply and how quickly your deposit is due after acceptance.
What to watch with pre-construction deposits:
- Where deposits are held and whether they are in trust.
- Refund conditions if the developer cancels or misses critical dates.
- Whether your agreement has a financing condition or waives it.
Interim occupancy explained
Interim occupancy is the period after you get the keys but before the condo corporation is registered and title transfers to you. During this time, you pay an interim occupancy fee rather than a mortgage on the balance of the purchase price. The fee usually reflects interest on the unpaid balance, a share of common expenses, and sometimes property taxes and utilities, as set out in the agreement.
In large Downtown and Waterfront builds with multiple phases, interim occupancy can last several months or longer. You cannot register your mortgage until final closing, so confirm how long your rate hold lasts and what happens if closing is delayed. Ask your lawyer to explain the fee formula, any caps, and what triggers the end of interim occupancy.
HST and rebates on new condos
In Ontario, new residential units from a builder are subject to HST at 13 percent. Most sales of previously occupied residential units are generally exempt from HST. If you buy new construction, eligibility for federal or provincial new housing rebates depends on how you will use the unit and the purchase price.
Assignments and profit on assignment can change the tax picture. In some cases, the assignment may be treated as a taxable supply and attract GST/HST on the premium. Before you plan to assign or assume a contract, get advice on how HST and any rebates apply to your situation.
Assignments: selling your contract
An assignment is the sale of your purchase agreement to another buyer before final closing. Many builders require written consent, charge an administration fee, and set conditions the new buyer must meet. Some agreements restrict assignments entirely.
Any profit may be taxable, and there can be GST/HST implications on the assignment amount. If you are counting on flipping your contract, confirm the builder’s assignment policy, the fees, and talk to a real estate lawyer and tax advisor before you commit.
Closing timelines and delay risk
Resale closings are usually 30 to 90 days from offer acceptance, subject to financing and any conditions. You get a firm timeline and can plan your move-in or rental start date with confidence.
Pre-construction timelines span years from signing to occupancy and then to registration and final closing. Delays can stem from municipal approvals, construction sequencing and multi-tower phasing that is common on the Downtown Waterfront. Your agreement will set estimated dates and the builder’s rights to extend, so read those clauses closely.
Warranties and unit condition
New-build condos carry Tarion warranty protection. Coverage typically includes one year for workmanship and materials, two years for building envelope and systems, and seven years for major structural defects. Confirm the Tarion enrolment number and your deadlines to report any issues after occupancy.
Resale units rarely come with equivalent warranties. The best protection is a full review of the condominium status certificate, including reserve funds, any special assessments, and recent board minutes. Older buildings can offer great layouts and locations, but you should understand planned repairs and budgets.
Financing and insurance basics
For pre-construction, many lenders provide pre-approvals but do not advance funds until title transfers at final closing. During interim occupancy, you typically pay the builder’s fee rather than a mortgage. Ask your lender how they handle rate holds and what documents they will need as closing approaches.
Assignments can have extra financing conditions, and some lenders treat them differently. During construction and interim occupancy, the builder’s policy covers the building, but you will need to arrange your unit insurance by occupancy and confirm any lender requirements.
What to read before you sign
Pre-construction checklist:
- Purchase agreement deposit schedule, payment deadlines and any acceleration clauses.
- Statement of critical dates, interim occupancy formula, and builder extension rights.
- Assignment clause, builder consent process and any fees.
- Tarion enrolment and warranty summary, including claim timelines.
- HST clause and whether price includes HST or adds it at closing.
- Parking and locker allocation, finishes selections and change order rules.
- Defaults and remedies, including deposit forfeiture language.
- Condo disclosure: draft declaration, bylaws, budget estimates and projected fees.
- Mortgage and closing obligations, including how interim occupancy affects financing.
Resale checklist:
- Status certificate review: budget, reserve fund, special assessments and litigation.
- Inclusions list, parking and locker rights, and unit boundary details.
- Home inspection where appropriate, especially for townhomes and older units.
- Title search and closing adjustments for taxes and utilities.
- Mortgage commitment terms and the agreed closing date.
Which option fits your goals
Choose pre-construction if you want brand-new finishes, modern amenities, Tarion coverage and a longer runway to move. It can suit buyers comfortable with construction timelines, interim occupancy fees and tax details, including HST and potential assignment considerations.
Choose resale if you want a firm closing date, the ability to inspect the exact unit, and fewer unknowns about fees and timing. It can suit buyers who need to move or rent quickly and prefer a simpler tax and closing process.
Downtown and Waterfront Toronto often see large, multi-phase communities that can extend interim occupancy and registration timelines. Established core buildings can command premiums for location and immediate access to the waterfront. Factor in transit access, planned municipal infrastructure and public realm work disclosed in project documents when you compare options.
Work with a local advisor
You do not need to navigate deposits, interim occupancy, HST and status certificates alone. A thoughtful plan matched to your timing, risk tolerance and budget will make the choice clear. If you are weighing specific projects against comparable resale options, let’s walk through the documents and numbers together and map the best path for you.
Have questions or want a tailored comparison of your shortlist? Reach out to Derek Ladouceur for friendly, expert help.
FAQs
What is interim occupancy in a Toronto condo purchase?
- It is the period when you can move in before the condo registers and title transfers, during which you pay a builder-set occupancy fee instead of a mortgage.
How big are deposits for pre-construction condos?
- Builders often require about 10 to 20 percent in stages, starting around 5 percent on signing, with exact schedules set in the purchase agreement.
Do I pay HST on a resale condo in Ontario?
- Most sales of previously occupied residential condos are generally exempt from HST, while new units from a builder are subject to HST at 13 percent.
Can I assign my pre-construction condo purchase?
- It depends on the builder’s agreement; many require consent and charge fees, and assignment profits can have tax and GST/HST implications.
What should I review in a resale condo purchase?
- Obtain the status certificate to review budgets, reserve funds, assessments and litigation, and confirm inclusions, parking, lockers and unit boundaries.
How long does a resale condo purchase take to close?
- Most resale condo transactions close in about 30 to 90 days from offer acceptance, subject to financing and conditions.
