What are Closing Costs in Calgary?

Buying a home can feel like an epic journey. From going to open houses with your real estate agent to scrolling through online listings to creating a budget, it can take months to find a house where you feel at home. 

And while finding and buying a home is a great feeling, it’s important not to forget about closing costs. Closing costs, which are a collection of administrative fees, include all charges and taxes related to insurance, record filing, legal activity, and anything else involved in the purchasing of a property. They are called “closing” costs because all of the costs must be paid by the closing date of the property, but they are not necessarily all paid right at the end of the process. 

Closing costs usually run between 1% and 4% of the total purchase price, depending on the property. Two examples include title insurance and the land transfer tax, but there are other closing costs as well, which we’ll detail below.

At Calgary House Finder, we understand that clients can sometimes feel stressed out when buying a new home. That’s why our experts are here to provide you with a breakdown of a variety of closing costs so you’ll know exactly what to expect when purchasing from our list of Calgary houses for sale.

What Do Closing Costs on a Home Include?

There are some closing costs that homebuyers should expect when looking to buy a new home in Alberta. 

Land Transfer Tax

When a buyer purchases a real estate property, such as a house, condo, or land, they need to pay a land transfer tax to have the ownership transferred to themselves. Alberta’s tax is unique to other provinces, since it’s divided into two parts:

  • Property Value ($50 base amount + $2 for every $5,000 or portion of value that equals $5,000)
  • Mortgage ($50 base amount + $1.50 for every $5,000 or portion of value that equals $5,000)

Example: The house you’re purchasing is worth $600,000 and you put down a 20% down payment. $600,000 - 20% = a $480,000 mortgage.

Calculate the land transfer tax on the property amount:

  1. $600,000 (property value) / $5,000 (tax portion size) = 120 (portions of value that each equal $5,000)

  2. $50 (base amount) + ($2 x 120 portions of value each equalling $5,000) = $290

The land transfer tax on the property value is a total of $290.

Calculate the land transfer tax on the mortgage:

  1. $480,000 (mortgage) / $5,000 (tax portion size)  = 96 (portions of value each equalling $5,000)

  2. $50 (base amount) + ($1.50 x 96 portions of value each equalling $5,000) = $194

The land transfer tax on the mortgage is a total of $194.

Final amount to be paid: $290 (total land transfer tax on property value) + $194 (total land transfer tax on mortgage) = $484.

Once you’ve submitted your legal documents for registration, buyers have to pay the land transfer tax at the Alberta Land Titles Office. 

Title Insurance

Title insurance is purchased through a real estate lawyer or notary. It protects new owners against property disputes that can sometimes arise after buying a home. In the case of a large estate, title insurance can protect the new owners if a lost heir suddenly shows up to stake their claim, for example.

Title insurance is about $300, and it’s different from home/property insurance. See the next closing cost for more details.

Home/Property Insurance

Property insurance is often paid in monthly installments, but it can also be paid as an annual lump sum once you’ve bought the home. As the closing date approaches, buyers may need to pay between $700 and $1,000. This type of insurance protects against loss and damages to your property. Buyers are required to purchase this in order to qualify for a mortgage, otherwise, they won’t be able to gain legal ownership of the property on closing day.

Legal Fees

You will need a real estate lawyer to review the Offer to Purchase and all home purchasing documentation involved. They will also ensure that all requirements have been met on your end and that of the seller’s for a successful closing day. 

Keep in mind that the legal fees in Calgary will vary depending on the lawyer’s rates, but expect to pay somewhere in the range of $500 and $1,500.

Property Appraisal

A mortgage lender or provider might ask you to have an appraisal conducted on your new home. A property appraisal costs about $300-500 and can be higher if the property is an extremely rural, large or unique home.

Property Survey

A mortgage lender or provider might also require you to have a survey conducted on your property. The seller may already have had one completed, but if they haven’t, the survey will cost buyers about $1,000-$2,000. However, some mortgage lenders and providers will accept that you have title insurance instead.

Estoppel Certificate Fee

An Estoppel certificate is only for buyers of a condo or a strat unit. It outlines whether or not the previous owner still has outstanding payments, as well as the interest owed on unpaid condo contributions. The certificate can cost up to $200.

Property Taxes / Adjustment Costs

The buyer of a Calgary home must pay the property taxes from the closing date to the end of the tax year. If the property taxes have already been paid by the closing date, it is the buyer’s responsibility to reimburse the seller. Expect this to cost between $300 and $500.

Fees for a Newly Built Home

Buyers of a newly built home must also pay a Goods & Services Tax (GST) and a New Home warranty, which is mandatory in Alberta and costs around $2,000.

Who Pays Closing Costs on a New Home?

Homebuyers pay most closing costs, however, one closing cost that the homebuyer does not pay is the commission of the real estate agent. Instead, the seller takes care of paying both agents, who split the commission between themselves. 

If sellers closed a mortgage before it matures, they are also responsible for legal fees and mortgage discharge fees. In rare cases when the housing market is tough, a seller may agree to pay all of the closing costs for the buyer. This is an attractive incentive for first-time buyers who may not have the budget to pay for all the requisite closing costs. 

Buyers can always negotiate which closing costs the seller can cover for them, provided the seller is willing to negotiate. Unfortunately for buyers, with today’s hot housing market, there is little incentive for sellers to bend on that particular issue. 

Need more help with the buying process in Calgary? We’re here for you!

Make Your Home Purchase with Calgary House Finder 

Our real estate professionals can provide you with more information on all of the closing costs you should be aware of when home-buying in Calgary. 

Contact us today or browse our listings!

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