Construction Insurance

Construction Insurance: It Is Not As Difficult As You Think

Construction Insurance
Construction Insurance – Do You Need It?

Insuring Your Home While Being Built – Construction Insurance

Even though insuring a home while it is under construction or being built is not directed by any laws, it is a must, especially if you finance all or a part of construction costs.

So, what type of construction loan insurance is required, and who is required to get it?

You may be one of the lucky ones whose insurance company covers your new home during construction under your standard homeowner’s policy. This will cover you for any damage to the house as it’s being built and may provide some coverage for theft of building materials.

Assuming you are not one of the lucky ones, there are three types of insurance needed to build a new home.

All banks require builders’ risk and general liability. Workman’s compensation is only needed if your builder has employees.

Construction Insurance

1. Builder’s Risk Insurance, also known as Course of Construction Insurance.

Builders risk insurance, specially designed to cover homes while they are under construction, protects the project itself from direct damage. Almost anything that can damage the project is covered. Typical policies include fire, lightning, windstorm, hail, and vandalism.

Lenders require the Builder’s Risk policy to cover the loan amount or the cost to build a new home that was specified on the appraisal. No bank will finance your home without this coverage.

This insurance doesn’t provide liability coverage or any protection for the home’s contents since there typically won’t be any personal possessions at the construction site.

A broader form of coverage is available, yet not necessary for minimum loan requirements, called “all-risk” insurance. It protects from every risk except those spelled out as exclusions.

Builder’s Risk insurance usually must cover at least 100 percent of the value of the home or the value of the total credit line on a construction loan.

Typically, if the new home is built on your lot, it is up to the homeowner to buy this type of insurance. Builder only insures it in the case the lot is in his name, and the title will be transferred to you at closing.

 2. General Liability Insurance:

General Liability insurance is designed to offer specific protection against third party insurance claims, i.e., payment is not typically made to the insured, but rather to someone suffering loss who is not a party to the insurance contract. For example, neighbour’s kids are playing on the construction site, and one of them falls and brakes his leg.

You or your builder can provide this policy. This policy is a comprehensive general policy or a broad form liability endorsement. If the builder provides the insurance, a general policy of $1,000,000 or a broad form liability endorsement is required.

Owner builders are legally responsible for conduct and damages on the job site and can be sued for negligence. General contractors solve this problem through their General Liability Policy. Since this policy is a commercial policy, it can be very expensive for the owner-builder.

The arrangement as to who provides this coverage must be worked out between the homeowner and the builder. However, any reputable builder will usually provide a policy that has coverage for all potential accidents. 

Ask your builder upfront if they have general liability insurance.  Some builders cannot afford or do not want to pay for the insurance and then guess who has to provide it. You can save yourself a lot of money and headaches if you work with a builder that has insurance.

3. Workman’s Compensation Insurance:

If your builder tells you he is not required to provide any coverage whatsoever, he is most likely correct because it is not a law to have insurance to build a house. 

If the builder directly subcontracts out the work and does not have employees per se, they will need to write a letter acknowledging that they do not have employees and are not required to have WSIB.

However, if your builder owns his company and has employees that are helping to build your home, the workman’s compensation is required.

This coverage will protect the contractor and the workers who are working on the property. 

If an employee is injured during the construction of a home and proper workers’ compensation insurance wasn’t funded, a worker can potentially come after both a contractor and a homeowner for damages.

Some of the financial institutions may ask for the builder to provide this insurance. So make sure you hire a reputable builder, it will help your construction loan close much faster.

As long as suitable workers’ compensation policy is in effect, the law states that injured workers may recover fixed insurance benefits but may not sue their employers. In some instances, owner builders are considered employers, so knowing who is responsible for the worker on-site is paramount.

In the case of sub-contractors providing workers for a project, they should already have a Workers’ Comp policy, and the owner-builder should not allow any work to be performed without proof of this insurance.

The booklet “Am-I-Covered” will answer most of your home insurance questions. Click here to download: Am-I-Covered

To learn more about Construction Insurance watch video below:

 

Cost of Home Building

The Cost of Home Building – Dreaming of Building a New Home, but Worried About the Expense?

How much will my dream home cost – What you need to know about a cost of homebuilding:

If you are considering having a custom home built, the following information will help you get an idea of the home building cost exclusive of land.

Cost of Home Building
The Cost of Home Building

There are many variables to consider in developing a rough estimate of construction cost due to the wide range of materials and options that might be used.

For example, marble and hardwood floors are more expensive than vinyl and carpet (which themselves can have a wide variance in quality and price). If your goal is building a home at low-cost – the finishing is what often makes the difference.

Also, most labour and material costs vary from one area of the country to another. However, you should be able to get a pretty good idea of what to expect before seeking bids from builders.

Beware of “ballpark” figures if you have not discussed how the home is to be finished.

A builder can usually provide a “budget” figure for average costs per square foot when the style and size of a home are known and an essential idea of what you are looking for with regards to finishing the home. Variables to this figure are site development costs and type of finish.

Beware of “ballpark” numbers if you have not discussed how the home is to be finished. Most builders set allowances for items such as appliances, flooring, lighting, tile, etc. These allowances, as well as material choices such as siding, roofing, windows, etc., play a role in that “ballpark” figure.

Before a firm bid or even a “ballpark” figure can be given, a builder must know what you expect to see in your home. When they have a general idea of what you would like to see in your home, they will give you a general idea of cost.

Clip Art Graphic of a Yellow Residential House Cartoon Character

Before you request a bid, take the time to list or discuss in detail your specifications. (Example: Cabinets; Cherrywood, “Lazy Susan” in both upper and lower corner cabinets, etc.) It is always best to be as thorough as possible. Make as many of the major decisions as possible (siding materials, flooring types, etc.) before construction. By making decisions early, you avoid potentially costly “Change Orders” or “Additions” later.

For Example: If in the original bid the kitchen floor finish is vinyl, and then later you change to hardwood, you will incur the cost difference in materials and installation labour, the cost to remove the underlayment for the vinyl that has already been installed, disposal of it and installation of the suitable material. Also, many builders charge a “Change Order” or “Additions” fee.

We devote all the time necessary to make sure the bid we propose to you is as complete as possible so that any changes that may arise are minor in nature.

By having a complete specifications list, we can assure you when the home is completed it will not exceed the originally quoted contract price. When we submit a bid for your review, we also include the contract as well. This gives you an entire package to consider carefully. You must assume in all cases if something you want included in the bid is NOT listed on the specifications; it is NOT included in the price.

You must make sure you are comparing “apples to apples”.

Most bids are guaranteed for 30 days. If you so desire, you can now take the plan and a list of specifications for a second bid. When reviewing bids, carefully compare the specifications for each line item listed (Cabinets, Flooring, Insulation, etc.). If there is a significant difference in line item costs, question BOTH builders as to WHY?

In today’s market, there is a large variety of materials available varying in quality and cost. To accurately compare bids, you must make sure you are comparing “apples to apples”.

house-tool-belt

Finally, in your custom home builder search, talk with several custom builders in the geographical area in which you plan to build to get a rough idea of what it may cost to build your house.

It may be to your advantage to start with a plan that the builder has used before and “customize” it to suit your objectives.

Remember this, nothing is given away for free. There is no free wood fence for your rear yard, garage door opener, upgrade to a whirlpool bathtub, etc.

Most Home Builders are professionals, and they will treat you that way. A real Professional Home Builder will give you an item by item cost breakdown including those intangibles such as insurance, interest and professional fees. Not to leave out the fee your builder needs to earn while building your home.

 

For more on Cost of Home Building please watch the video bellow:

(prices mentioned in video are North Carolina Prices – Ontario pricing is different)

How To Calculate HST On New Homes In Ontario

How To Calculate HST On New Homes In Ontario 2025

HST Calculator for New Homes in Ontario

HST Calculator for New Homes

🏠 Overview of HST and the New Housing Rebate

Purchasing a new home in Ontario involves several moving parts—and one of the most significant considerations is understanding the Harmonized Sales Tax (HST) and the rebates available. This guide explains how to calculate HST on new homes, clarifies the eligibility for HST rebates, and provides detailed examples using the formulas provided by the Canada Revenue Agency (CRA). Whether you’re a first-time homebuyer or an investor, this article will help you break down the numbers and understand what you’re paying.

  • Provincial Rebate: The provincial part of the HST rebate is fixed at 6% of the purchase price, up to a maximum rebate of $24,000. 💰
  • Federal Rebate: The federal portion is calculated on a sliding scale. It starts at a 36% rebate on the applicable HST for homes costing $350,000 or less, but the amount decreases proportionally for homes priced between $350,000 and $450,000. Homes with a builder’s base price (often called “consideration”) above $450,000 receive no federal rebate.

This structured rebate system helps lower the effective tax rate for new home buyers but also means the calculation can become complex—especially when the builder’s list price includes HST already.

👥 Who Can Claim the HST Rebate?

Before calculating your HST rebate, it’s essential to confirm that you meet the eligibility criteria. You may be able to claim a tax rebate for a portion of the HST if you meet one of the following conditions:

  • Purchasing from a Builder: You buy a newly constructed home (including the land) directly from a home builder.
  • Self-Build or Renovation: You construct your own home, substantially renovate an existing one, or carry out a major addition (or hire someone to do so). 🛠️
  • Alternative Dwellings: You buy a new mobile home or a floating home from a builder or vendor.
  • Co-operative Housing: You purchase a share of the capital stock of a co-operative housing corporation.
  • Rebuilding After Destruction: Your home was destroyed in a fire and is being rebuilt.

For the rebates to apply, other specific conditions must also be met. The property must be a newly constructed or substantially renovated single-unit residential complex or a condominium unit (with the related land) situated in Ontario, and the sale must have HST applied at the full 13% rate. Additionally, there needs to be an agreement between the builder and the buyer that specifies a stated price net of the new housing rebates.

🔢 Understanding the HST Components

The total HST payable on a new home is based on the builder’s base price (often referred to as the “consideration”). The builder’s list price typically includes HST, so a portion of that tax is already “built into” the purchase price.

  • Builder’s Base Price: This is the price before HST is added. It’s the starting point for calculating both the HST amount and the subsequent rebates.
  • Total HST Payable: Once you have the builder’s base price, you apply the 13% HST rate.
  • Rebate Calculations:
    • Federal Portion: Calculated at 36% of the federal part (5%) of the HST based on the base price. However, this is available in full only for homes with a builder’s base price of $350,000 or less, with a gradual phase-out for prices up to $450,000.
    • Provincial Portion: Calculated at 75% of the provincial part (8%) of the HST based on the base price, capped at a maximum rebate of $24,000.

The CRA’s formulas help “back out” the base price from the builder’s list price net of rebates. The specific formula you use depends on which pricing band your home falls into.

📋 Step-by-Step HST Calculation Process

Before diving into the specific formulas for different price ranges, follow these general steps:

  1. Determine the Stated Price Net of Rebates (SPNR):
    This is the builder’s list price after accounting for any rebates that have been built into the price.
  2. Calculate the Builder’s Base Price:
    Use the appropriate formula for your home’s price band to convert the SPNR into the base price. This “back calculation” accounts for the fact that the list price includes a certain amount of HST.
  3. Calculate Total HST Payable:
    Multiply the builder’s base price by 13% to determine the total HST that applies to the base price.
  4. Determine the Rebate Amounts:
    • Federal Rebate: For eligible homes (up to $450,000 in base price), calculate 36% of the federal portion (5%) of the builder’s base price. For homes between $350,000 and $450,000 (in base price terms), this amount is reduced proportionally.
    • Provincial Rebate: Calculate 75% of the provincial portion (8%) of the builder’s base price, ensuring it does not exceed $24,000.
  5. Apply the Rebate:
    Subtract the rebate amounts from the total HST payable to determine the net tax cost.

For investors, if you must remit additional HST at closing, the rebate process might take 6 to 8 weeks and often requires that the property be leased for at least one year. 📆

💡 Price Bands and Their Specific Formulas

The CRA has established four pricing bands based on the SPNR (or stated builder’s list price net of rebates). Each band has its own formula to determine the builder’s base price. Let’s explore these one by one.

🔹 Price Band 1: Properties Priced Under $368,200

Scenario:

  • The SPNR is not more than $368,200, implying that the builder’s base price is not more than $350,000.

Formula:
Builder’s Base Price=SPNR1.052Builder’s Base Price=1.052SPNR​

Example 1:

  • SPNR: $325,000
  • Calculation:
    Builder’s Base Price=325,0001.052≈$308,935.36Builder’s Base Price=1.052325,000​≈$308,935.36
    This calculation shows that approximately $16,064.64 of HST is already included in the builder’s list price.
  • Further Calculations:
    • Total HST Payable:
      308,935.36×13%≈$40,161.60308,935.36×13%≈$40,161.60
    • Federal Rebate:
      (308,935.36×5%)×36%≈$5,560.84(308,935.36×5%)×36%≈$5,560.84
    • Provincial Rebate:
      (308,935.36×8%)×75%≈$18,536.12(308,935.36×8%)×75%≈$18,536.12

For an investor, after calculating these figures, you’d remit the additional HST (in this case, about $24,096.96) at closing and then apply for the rebate—usually a process that takes between six to eight weeks.

🔹 Price Band 2: Properties Priced Between $368,200 and $424,850

Scenario:

  • The SPNR is more than $368,200 but not more than $424,850. This means the builder’s base price lies between $350,000 and $400,000.

Formula:
Builder’s Base Price=(SPNR+28,350)1.133Builder’s Base Price=1.133(SPNR+28,350)​

Example 2:

  • SPNR: $410,000
  • Calculation:
    Builder’s Base Price=410,000+28,3501.133≈$386,893.20Builder’s Base Price=1.133410,000+28,350​≈$386,893.20
    This implies that approximately $23,106.80 in HST is built into the builder’s list price.
  • Further Calculations:
    • Total HST Payable:
      386,893.20×13%≈$50,296.12386,893.20×13%≈$50,296.12
    • Federal Rebate:
      The federal rebate is calculated proportionally using:
      6,300×(450,000−Base Price)100,0006,300×100,000(450,000−Base Price)​ Substituting our base price:
      6,300×(450,000−386,893.20)100,000≈$3,975.736,300×100,000(450,000−386,893.20)​≈$3,975.73
    • Provincial Rebate:
      (386,893.20×8%)×75%≈$23,213.59(386,893.20×8%)×75%≈$23,213.59

🔹 Price Band 3: Properties Priced Between $424,850 and $484,500

Scenario:

  • The SPNR is more than $424,850 but not more than $484,500, which corresponds to a builder’s base price between $400,000 and $450,000.

Formula:
Builder’s Base Price=(SPNR+52,350)1.193Builder’s Base Price=1.193(SPNR+52,350)​

Example 3:

  • SPNR: $460,000
  • Calculation:
    Builder’s Base Price=460,000+52,3501.193≈$429,463.54Builder’s Base Price=1.193460,000+52,350​≈$429,463.54
    This means that about $30,536.46 in HST is included in the list price.
  • Further Calculations:
    • Total HST Payable:
      429,463.54×13%≈$55,830.26429,463.54×13%≈$55,830.26
    • Federal Rebate:
      Using the sliding scale formula:
      6,300×(450,000−429,463.54)100,000≈$1,293.806,300×100,000(450,000−429,463.54)​≈$1,293.80
    • Provincial Rebate:
      Calculated as:
      (429,463.54×8%)×75%(429,463.54×8%)×75% Since the maximum provincial rebate is $24,000, the calculation here reaches that cap.

🔹 Price Band 4: Properties Priced Over $484,500

Scenario:

  • The SPNR is more than $484,500, which means the builder’s base price exceeds $450,000. For homes in this category, the federal portion of the HST rebate is not available.

Formula:
Builder’s Base Price=(SPNR+24,000)1.13Builder’s Base Price=1.13(SPNR+24,000)​

Example 4:

  • SPNR: $700,000
  • Calculation:
    Builder’s Base Price=700,000+24,0001.13≈$640,707.96Builder’s Base Price=1.13700,000+24,000​≈$640,707.96
    This calculation indicates that roughly $59,292.04 in HST is built into the builder’s list price.
  • Further Calculations:
    • Total HST Payable:
      640,707.96×13%≈$83,292.03640,707.96×13%≈$83,292.03
    • Federal Rebate:
      Since the builder’s base price exceeds $450,000, no federal rebate is available.
    • Provincial Rebate:
      The provincial rebate is still calculated as:
      (640,707.96×8%)×75%(640,707.96×8%)×75% This rebate remains subject to the maximum cap of $24,000.

📌 Special Considerations for Investors

Investors purchasing new homes may encounter a slightly different process. While the basic calculation for HST and the rebates remains the same, an investor may be required to remit any additional HST at closing. Following that, the investor can apply for the rebate for the HST paid. Keep in mind that:

  • The investor must remit the additional HST upon closing.
  • The rebate process generally takes about 6 to 8 weeks.
  • The property usually must be leased to a tenant for a minimum of one year before the rebate can be fully applied. 🔑

Understanding these requirements is critical when planning the cash flow for your investment.

✅ Putting It All Together: A Recap of the Calculation Process

Let’s summarize the process with a simple checklist:

  1. Check Eligibility:
    Confirm that you meet one of the qualifying scenarios for claiming a new housing HST rebate.
  2. Determine the SPNR:
    Identify the builder’s list price net of rebates.
  3. Identify the Appropriate Price Band:
    Decide which formula to use based on whether your SPNR is under $368,200, between $368,200 and $424,850, between $424,850 and $484,500, or over $484,500.
  4. Calculate the Builder’s Base Price:
    Use the correct formula to “back out” the HST included in the SPNR.
  5. Calculate Total HST Payable:
    Multiply the builder’s base price by 13%.
  6. Compute the Rebate Amounts:
    • Federal Portion: Calculate 36% of 5% of the builder’s base price for eligible homes.
    • Provincial Portion: Calculate 75% of 8% of the builder’s base price, ensuring it does not exceed $24,000.
  7. Deduct Rebates:
    Subtract the rebate amounts from the total HST payable to determine your net tax obligation.
  8. For Investors:
    Remit any additional HST at closing and apply for the rebate once the property meets the leasing conditions.

By following this methodical approach, you can confidently determine your HST costs and available rebates on a new home purchase or construction project in Ontario.

🔍 Important Points to Remember

  • Maximum Rebates:
    The provincial rebate is capped at $24,000, while the maximum federal rebate is $6,300—subject to the home’s price falling within the eligible range.
  • Sliding Scale for Federal Rebate:
    The federal rebate reduces gradually for homes with a builder’s base price between $350,000 and $450,000. If the base price exceeds $450,000, the federal rebate is zero.
  • Conditions Apply:
    The calculations above are valid only if all required conditions are met. This includes the type of property, its location in Ontario, the application of HST at 13%, and specific agreements between the builder and the purchaser regarding net pricing.
  • Investor Considerations:
    If you’re an investor, be aware of the additional steps regarding the remittance of extra HST at closing and the subsequent rebate application process.
  • Professional Guidance:
    While these calculations provide a good estimate, always consult a tax professional or the latest CRA guidelines to ensure that you’re applying the correct formula for your situation. 📑

📝 Conclusion

Calculating HST on new homes in Ontario may seem daunting at first due to the multiple components and sliding scales involved. However, by breaking the process down into clear steps and applying the correct formula for your home’s price band, you can simplify the task considerably.

Whether you are buying a new home from a builder or undertaking construction yourself, the key is to:

  • Understand the difference between the builder’s list price and the base price,
  • Know how much HST is included in the purchase price,
  • Calculate the total HST payable, and
  • Accurately determine both the federal and provincial rebate amounts.

This guide has walked you through each step—from determining eligibility to applying the formulas for different price ranges—and provided examples that illustrate how the calculations work in practice. For investors, keep in mind that while the calculation method remains similar, additional steps at closing and specific leasing requirements apply. Always plan for these extra conditions to ensure a smooth process when claiming your rebate.

By following the guidelines outlined in this article, you should be able to confidently estimate your HST costs and understand how much you might save with the new housing rebates available in Ontario. Remember, though, that while this article is designed to clarify the process, it is not a substitute for professional tax advice.

HST Calculator for New Homes in Ontario

HST Calculator for New Homes

Disclaimer:
This article is intended to provide general information about calculating HST on new homes in Ontario and the applicable rebates. It is not legal or tax advice. For personalized guidance and the most up-to-date information, please consult a tax professional or review the latest CRA publications.

How much per square foot

How much will my house in Southern Ontario cost per square foot?

Most people think that the “cost per square foot” of a house is one of the best ways to determine whether it’s a good value. New home builders have to deal with this every day, and the truth is typically not what the client wants to hear.

How much - cost per square foot

So, how much will my house cost per square foot?

Usually, there are several items that drive up the actual price:

[udesign_icon_font name=”fa fa-arrow-circle-right” color=”#1e73be” size=”1.2em”] The level of design,
[udesign_icon_font name=”fa fa-arrow-circle-right” color=”#1e73be” size=”1.2em”] The level of finishes,
[udesign_icon_font name=”fa fa-arrow-circle-right” color=”#1e73be” size=”1.2em”] The location and easy access to your building site.

With no knowledge of all of those factors, it’s always tough to give square footage cost.

Estimates are provided to future homeowners dependent on what builders are going to charge approximately on the “per sq.foot” basis. This “cost per square foot” is far from the final price. Nevertheless, to the customer, it gives an indication of what the cost of their new home is going to be.

[message type=”info”]How Does the “Price Per Square Foot” Assist In Determining Worth?

In short, it doesn’t. You can’t take the average price-per-square-foot and multiply it by the square footage of the home you are buying. It doesn’t work that way. The pricing per-square-foot merely gives you average or median ranges; it shows you trends. It can’t compute the value.[/message]

All of the following variables will inevitably affect the final cost of the house:

1. Municipal Costs and Services and Regional Building Permit Costs:

Acreage that’s never been built on may be governed by development fees, lot levies, school levies and also there are always building permit expenses to take into consideration.

The cost of water and also sewer connections, electrical together with natural gas hookups all need to be thought of. Building permits are essential for new construction, temporary buildings as well as for modifications to the pre-existing structure.

You should take a look at building requirements with Town staff before commencing a project. The price tag on building permits is dependent upon the nature and scope of the work being carried out.

[message type=”success”]Quality workmanship isn’t cheap.

To quote a lower cost, a builder can opt to hire the low-bid carpenter, plumber or drywaller on your home. The value of caring craftsmen shows up when you have annoying air leaks around your new windows, doors that close by themselves or poor water pressure in your master bathroom.[/message]

2. Building Site

Site requirements influence the price. One of the initial concerns is the amount of working room. Is there space on the site to hold excessive dirt, materials along with equipment? Is this site flat and does it slope? The answer to which will cost more is apparent.

Tree shielding can also be an issue in lots of municipalities and the existence of a big tree that should be preserved impacts on the amount of available work area around it.

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3. Size and Layout

The size of homes will certainly affect the cost of building a home. The larger it is, the more it will cost in total dollars. Having said that, the larger it is, the less it’ll cost per square foot. When room dimensions increase, the amount of materials that go into building the room doesn’t necessarily expand at the same rate.

To provide an example: there is only one kitchen, no matter is a home 1200 sq.ft., or 2000. Nevertheless, the floor covering increases in direct proportion to the size of space. Thus, although a Twelve hundred square foot house could cost $200 per square foot to create, a four thousand square foot home might cost $180 for every sq. ft . to build.

[message type=”success”]The materials/products used vary by the builder

Your price includes granite countertops! But which granite, the $40 per sq. ft. or the $100 per sq. ft granite? Are the included hardwood floors 3/4” or the cheaper 3/8” thickness? Seeing on a builder’s specifications sheet that granite countertops and hardwood floors are included is insufficient for comparing different builders’ cost per square foot prices.[/message]

4. Finishes:

This relates to the material used. Kind of outside finish (i.e., siding vs. stone) in addition to interior finish – flooring materials, cabinets, countertops, and electrical and plumbing fixtures virtually all change the selling price. Furthermore, labor expenses may vary solely by kind of materials – marble and travertine tile will be more expensive to install compared to ceramic or porcelain tile.

5. Mechanical:

They are the products that are within the walls that you just will never see, plus the products in the mechanical room. The regular residence may have fiberglass insulation plus a gas furnace.

A custom residence might have additional expensive spray foam insulation, and high-efficiency furnaces can be combined with air exchanges and electronic air cleaners, and in-floor heat to raise the degree of comfort for occupants.

[message type=”info”]Our choices…

Because of expensive cabinetry, countertops, faucets, tile floors, appliances, and plumbing fixtures, your kitchen selections alone could increase your home’s overall cost by $10-20 per square foot! Also, raising costs without increasing square footage are fireplaces, lighting, window treatments, and even paint—many builders charge $100 or more each time you change paint colors.[/message]

So, what does a newly built home in Southern Ontario cost these days?

Most custom builders in Ontario will work out the price within the array of $200 per square foot to $350 per square foot. The majority of semi-customs are built at $250 per square foot, depending on size, design, systems, finishes, location, etc.

Unfortunately, the only way to be sure that your home building budget is reasonable is to identify and price every item that will be used to build your home and bid all of the associated subcontracts and labor costs.

Of course, to do that, you will need to have plans and specifications, and you will need to develop a complete and thorough estimate for your project.

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Think About This:

A house built to code is a house that meets the minimum building requirements for a new house in Ontario!

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The obvious problem here is that not many people want to buy a dozen different house plans and then spend weeks or months pricing them to determine which one they can afford to build.

So, a more realistic approach to determining how much your new home will cost might be just to work backward. Start by determining how much you can afford to spend, then be realistic about the size of the house you need, and finally, decide what and where you can afford to build.

[message type=”info”]

An all-brick home may be hundreds of square feet bigger than the same home with siding! Was the second-story area of a 2-story high entry foyer included? It’s heated space, but it isn’t “walkable” square footage. Such differences can dramatically impact the home’s reported square footage and thus its cost per square foot!
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We hear horror stories of builders who will quote a low price per square foot and then pound the buyer with extras after the job is started. Contact your builder’s references! Have you thought about the cost per square foot of your new home warranty? Warranty policies vary by the builder!

Every home builder can give you a detailed and accurate cost per square foot

“Production” builders, repeatedly building the same portfolio of plans, developing entire neighborhoods and offering less personalization can most quickly quote you a price per square foot. With fixed standards, their economies of scale typically enable them to provide the lowest cost per square foot.

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What’s included in the price?

Builder A includes and hardwood flooring, Builder B figures carpet. Builder C includes full sod and a generous landscaping allowance, Builder D’s price only includes grass seed. Was a concrete driveway covered? Don’t laugh! Such factors don’t affect the size of your home but affect the cost per square foot.

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Semi-custom builders offer a wider variety of home designs, building sites, personalization and finish selections for your home. Initially, they may quote you a broad price range, such as “$100 to $200 per square foot depending on what you want” reflecting many of the variables addressed. As you make decisions, the ultimate price per square foot comes clearer into focus.

A custom home builder may never build the same home twice. She doesn’t have historical data for that specific home to look back on as a starting point. Knowing that custom home buyers often have specific products and amenities in mind, understand she can’t give you an accurate cost per square foot upfront.

Do you really want the cheapest house?

Even if it was possible to get a reasonably comparable cost per square foot info from multiple builders, are you going to take the lowest price automatically? How do you suppose the builder with the lowest price per square foot was able to do it?

[message type=”info”]What square footage was the price based on?

Basements? Attics? What if, due to a sloping ceiling, you can only stand up in a small portion of that attic? What about porches, a deck, patio or the garage? If the garage space doesn’t increase a home’s square footage, why not build a 4-car garage? A silly exaggeration but any cost per square foot comparison is meaningless if the square footage of these areas is counted differently by various builders.
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When it comes to building or even remodeling a home, like with most of the major purchases, you get what you pay for. So…if you choose to, use preliminary cost per square foot numbers to help you know if you’re “in the ballpark” budget-wise. But understand it’s just not a good way to compare builders and their homes.
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Since sophisticated rooflines and dramatic entryways don’t increase a home’s square footage, such homes cost more per square foot. Homes with higher ceilings or artful ceiling details cost more per square foot than homes with standard, 8-foot high flat ceilings.[/message]

 

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[message type=”success”]   The Myth & Math of Cost per Square-Foot – Click here to download!
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7 Best Ways To Get Home Improvement and Building Loan

7 Best Ways To Get Home Improvement and Building Loan

 

Home Improvement and building projects are widely popular credited to the growth of TV series and designer shows. While smaller projects top the list of frequency, such as painting and decorating, all home improvement projects can add up quickly.

7 Best Ways To Get Home Improvement and Building Loan
7 Best Ways To Get Home Improvement and Building Loan

 

The savvy shopper will not only shop around for the best deal on fabric, but on home improvement loans as well. There are many reasons why people go for home improvement loans, and just as many ways in which to do so. Common borrowing purposes can basically be divided into two categories. The first would cover things such as buying clothes and other purchases on credit cards, using store credit, and taking advantage of buy now pay later or other store financing offers, or perhaps borrowing to pay for a holiday.

The many toget Home Improvement loans are as follows:

1. Personal Loans: Most home owners meet their home improvement loans requirement for home improvement through personal loans. This can save thousands in interest payments. Though mostly widely preferred, the interest rates are subject to market conditions.

2. Secured loan: Secured loan or mortgage can be taken out as secured loans against the equity in your property. This will enable you to take out a more substantial home improvement loans than you would get with an unsecured loan, and you can also enjoy lower monthly repayments and better interest rates.

3. Dealer financing: Whether you want to get central heating fitted or have all the doors replaced, or whether you want to redecorate throughout, have a new kitchen or bathroom, or any other type of home improvement, the dealer from who you buy the goods will finance you with home improvement loans and you repay the principle inclusive of a high rate of interest.

4. Home Improvement Mortgage Refinance: Many homeowners are refinancing to lock in attractive long term fixed interest rates, and thereby using the extra money to pay for remodeling projects. With this type of home improvement loan, you can schedule repayment for 20 or 30 years into the future, and the interest is tax deductible. However, one drawback is that because you’ll be repaying the money slowly the accumulated interest can be quite significant.

5. Home Equity Loans: A Home Equity Loan allows you to borrow against the value of your home and is also one of the smartest ways to finance home improvements. Although one major drawback is that if you default on your payment, you run the risk of losing your home, so paying these loans back in a responsible manner is an absolute must.

6. Bank Loans: Regular Consumer Bank Loans come in handy as home improvement loans, especially for those home owners who need to borrow relatively small amounts of money without much paperwork or delay. These loans usually need to be paid back within a few years, rather than a few decades.

7. Low interest fixed rate loans: Homeowners, including those who have little or no equity in their property, may be eligible for a low interest fixed rate home improvement loan to fund repairs. Which ever way you may choose to meet your home improvement loan it should suit you’re your budget and timeline. Look for monthly payments that you can easily manage, and an interest rate and schedule of repayment that meets both your short and long term goals.

 

6 Ways to Bring Down Your Mortgage Faster

7 best ways to get Home Improvement Loan

Home Improvement projects are widely popular credited to the growth of TV series and designer shows. While smaller projects top the list of frequency, such as painting and decorating, all home improvement projects can add up quickly. The savvy shopper will not only shop around for the best deal on fabric but on home improvement loans as well.

7 best ways to get Home Improvement loan
Home Improvement Loan

 

There are many reasons why people go for home improvement loans, and just as many ways in which to do so. Standard borrowing purposes can be divided into two categories. The first would cover things such as buying clothes and other purchases on credit cards, using store credit, and taking advantage of buy now pay later or other store financing offers, or perhaps borrowing to pay for a holiday.

The many to get Home Improvement loans are as follows:

1. Personal Loans: Most homeowners meet their home improvement loans requirement for home improvement through personal loans. This can save thousands in interest payments. Though mostly widely preferred, the interest rates are subject to market conditions.

2. Secured loan: Secured loan or mortgage can be taken out as secured loans against the equity in your property. This will enable you to take out a more substantial home improvement loans than you would get with an unsecured loan, and you can also enjoy lower monthly repayments and better interest rates.

3. Dealer Financing: Whether you want to get central heating fitted or have all the doors replaced, or whether you wish to redecorate throughout, have a new kitchen or bathroom or any other type of home improvement, the dealer from who you buy the goods will finance you with home improvement loans, and you repay the principle inclusive of a high rate of interest.

4. Home Improvement Mortgage Refinance: Many homeowners are refinancing to lock in attractive long-term fixed interest rates, and thereby using the extra money to pay for remodeling projects. With this type of home improvement loan, you can schedule repayment for 20 or 30 years into the future, and the interest is tax deductible. However, one drawback is that because you’ll be repaying the money slowly the accumulated interest can be quite significant.

5. Home Equity Loans: A Home Equity Loan allows you to borrow against the value of your home and is also one of the smartest ways to finance home improvements. Although one major drawback is that if you default on your payment, you run the risk of losing your home, so paying these loans back in a responsible manner is an absolute must.

6. Bank Loans: Regular Consumer Bank Loans come in handy as home improvement loans, especially for those homeowners who need to borrow relatively small amounts of money without much paperwork or delay. These loans usually require to be paid back within a few years, rather than a few decades.

7. Low interest fixed rate loans: Homeowners, including those who have little or no equity in their property, may be eligible for a low interest fixed rate home improvement loan to fund repairs. Whichever way you may choose to meet your home improvement loan it should suit you’re your budget and timeline. Look for monthly payments that you can easily manage, and an interest rate and schedule of repayment that meets both your short and long term goals.

How To Calculate HST On New Homes In Ontario

HST on new homes in Ontario

HST on new homes in Ontario
HST on new homes in Ontario

HST on new homes in Ontario

By: Mark Weisleder

Some investors who bought new homes or condos in the past few years planning to flip them in a hot Toronto market are facing HST bills of up to $30,000.

That’s because they didn’t read the fine print on the purchase agreement and they now have a problem that relates to the HST rebate that is available to buyers of new homes under certain conditions.

When you buy a new home or condominium, there are rebates for the federal 5 percent portion of the HST and in Ontario, the provincial 8 percent portion.You can qualify for a rebate of 36 percent of the federal portion of the HST if the home costs $350,000 or less.

How To Calculate HST On New Homes In Ontario

If the home costs between $350,000 and $450,000, there is a sliding scale. At $450,000 the rebate ends. For the provincial portion, everyone can apply for up to 75 per cent of the HST paid, to a maximum of $24,000.

You can also apply for the rebates if you build your home as well. It can add up to a sizeable sum. If a new home costs $300,000 and there was no rebate, the HST would be 13 per cent of the price or $39,000. With the rebates, you’d pay $15,600 for a saving of $23,400.

The catch is that to qualify, the new home or condo has to be your primary residence, or you must prove that you have rented it out for at least a year. If you move in on closing, the builder often builds the rebate into the sale price and then applies to the Canada Revenue Agency for the refund on your behalf.

Clip Art Graphic of a Yellow Residential House Cartoon Character

Before the builder will do that, you have to sign a document saying that you will move in. If the builder suspects you will not be moving in, they have the right to ask you to pay the rebate on closing. If you bought the house as an investment and plan to rent it out, you can apply for the rebate immediately as well, but will have to send proof that you closed your deal and a copy of the lease agreement.

If you sell the investment property within a year, you have to pay the tax. Many investors who bought new homes or condominiums several years ago from plans are trying to take advantage of the hot real estate market by selling without moving in.

However, these same investors signed papers with the builder promising that they would move in, so the builder applied for HST rebates on their behalf. Now CRA wants the HST rebate back with interest. That can be as much as $30,000. I’ve heard plenty of stories from realtors about investor clients receiving demand letters from CRA about the HST.

The lesson is that buyers must understand their obligations if they intend to apply for any HST rebate on a new home or condominium. Either you must move into the home as your primary residence on closing, in which event you can immediately apply for the full rebate, or you must rent it out for at least one year and then apply for the rebate.

If you are intending to immediately re-sell your home without moving in, then just pay the full HST amount when you buy the home from the builder, and don’t apply for any rebate.

This article has been changed from an earlier version to clarify the HST rules regarding investment properties.
Mark Weisleder is a real estate lawyer. Email Mark at mark@markweisleder.com

 

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