How much does a parking spot cost in Toronto ? | Do you pay tax when buying a parking spot ?
Thursday Apr 09th, 2020
How much does a parking spot cost in Toronto?
Do you pay tax when buying a parking spot?
Hey guys, it's Karen from Toronto here.
I had a client the other day reach out about purchasing an additional parking spot.
So in today's video, I wanted to tell you guys straight up what the closing costs would be if you were to purchase an additional parking spot or even purchase an additional storage locker.
It's important to know what your closing costs are because let's say for example, you see a $75,000 parking spot for sale and you plan to purchase it. Well that $75,000 parking spot will probably end up costing around $87,000 once you take into account all of your closing costs.
A lot of condo owners here in Toronto are interested in either purchasing an additional parking spot or an additional storage locker. So what I'll do is I will compare the price of both the storage locker and a parking spot.
Now before we jump into the video, if you're new to the channel go ahead and click that "like" and "subscribe" button now, so you don't miss out on any future content.
Moving along today's topic is for those of us who own a condominium.
Now, if you want to purchase an additional parking spot or an additional storage locker, there will always be additional fees on top of your purchase price. And these additional fees are called "Closing Costs".
Closing costs are associated with every real estate transaction in the province of Ontario. So whether you're buying a house or a condominium or even something smaller such as a parking spot or a storage locker there will always be additional fees on top of your purchase price that are called closing costs. And your closing costs can be broken down into three parts.
The first part is your land transfer taxes. And the amount that you pay in land transfer tax is determined by the purchase price.
So let's go through an example together.
Let's say you purchase an underground parking spot in your condo building for $75,000. Based on that your land transfer taxes would be $950.
On the other hand, let's say you're interested in purchasing a storage locker in your condo building. Let's say the storage locker is $5,500 to purchase. The land transfer tax amount for that would be $55.
Now the second component to closing costs are your legal fees. You will require the assistance of a real estate lawyer to help run title searches as well as transfer title ownership to you.
And your average legal costs will run you approximately $1,500 to about $2,000.
You would think that the legal fees for purchasing a $75,000 parking spot would be lower than the legal fees involved in say purchasing a $1,000,000 dollar property. But the reality is that the lawyer still has to run the same title searches and still has to do the same amount of work to transfer title ownership to you. Because the lawyer has to do the same amount of work whether you're purchasing an additional parking spot or you're purchasing an additional property, you can expect that the legal fees will run you the same. So you can expect to pay the average $1,500 to about $2,000 in legal fees.
Now your third and final part to your closing costs, it's going to surprise many of you, and it is paying your 13% HST tax on the parking spot or the storage locker.
I noticed there is a ton of misleading information on the internet about people debating whether there is HST tax payable on the purchase of a parking spot or a storage locker.
So let me share with you the correct answer.
There is no HST tax if you purchase a condominium that happens to include parking spots or storage lockers. However, the interesting part of that confuses a lot of people is that if you purchase a parking spot or a storage locker on its own, separate from the purchase of a condominium, you will be expected to pay 13% tax on that purchase.
Let's continue with our example. On the $75,000 parking spot, the HST will run you an additional $9,750.
And for the $5,500 storage locker there will be an additional $715 in HST tax.
So let's summarize the total costs for purchasing a parking spot or a storage locker. And we're going to assume that the legal fees are $1,500.
For the $75,000 parking spot, your closing costs will be an additional $12,200. So that brings your total purchase price on the parking spot up to $87,200.
For the $5,500 storage locker, your closing costs will be an additional $2,270. So that brings the total purchase price of the storage locker up to $7,770.
Now when it comes to closing costs, your lawyer is the individual who will be invoicing you for the exact amount of closing costs that are due.
So the closing costs as well as the purchase price, will be payable just before title ownership is transferred over to you.
Also, please remember that Property Taxes will be an ongoing cost to budget for after purchasing a parking spot. For an average parking spot in downtown Toronto, the property taxes in will cost approximately $300-$400 each year (three to four hundred dollars annually).
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