New Build vs. Resale in the GTA: Price, Warranty, Risk and Carrying Costs Compared
A builder pre-con home comes with Tarion warranty and HST rebates; a resale lets you move into a mature neighbourhood today. The real difference isn’t price — it’s how you pay and what risk you carry.
Should I buy a new build (builder / pre-construction) or a resale home in the GTA?
Neither is universally “better” — they suit different buyers. A new build (builder / pre-construction) usually means a staged deposit (~15–20% paid over time), Tarion new-home warranty (1-year workmanship / 2-year systems and water penetration / 7-year major structural), and a price that carries HST — with the New Housing Rebate typically baked into the builder’s listed price. But it means waiting, delay risk, and, for condos, an interim “occupancy fee.” A resale means ~5% deposit on a firm offer, generally no HST, and moving into a mature neighbourhood now — but no warranty and ageing systems you carry yourself. Both pay land transfer tax. (Source: Tarion / CRA, 2026)
Source: Tarion (tarion.com, 2026) / Canada Revenue Agency (canada.ca, 2026) / Ontario Ministry of Finance (ontario.ca, 2026)
I’m Arthur Zhao. “Is a new build or a resale better?” is one of the questions I hear most — and it’s the wrong question. The real one is: given your timeline, your cash flow, and your appetite for risk, which one fits you? A builder pre-construction home and a resale run on two completely different logics for how you pay, what’s warrantied, what it costs to close, and how certain the move-in is. One is “lock the price, pay in stages, wait for it to be built.” The other is “see it, close in weeks, move in now.” Below I lay the two side by side, item by item, and finish with a decision framework by buyer situation — so you know exactly what you’re buying before you write an offer.
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First, what "new build" and "resale" actually mean here
By new build, I mean buying brand-new or pre-construction (a “pre-con” unit) directly from the builder — you’re the first owner, on the builder’s contract, and the home may not be built yet. A resale is an existing home bought from the previous owner on a standard OREA agreement, usually closing within weeks. The core difference isn’t newness itself — it’s that the whole payment structure, tax treatment, warranty and risk behind each is different. Many clients open with “does a new build hold value better?” when the first question should be whether they can wait and how their cash is sequenced — that’s what decides whether a given path is even viable for them.
Deposit structure: resale is one ~5%; pre-con is staged 15–20%
HST: new homes carry it (rebate usually baked into price); resale generally doesn’t
ℹ️When you read a builder’s pre-con price, in most cases the New Housing Rebate is already baked in and you’re required to assign the rebate to the builder. But if the unit is an investment rental rather than your principal residence, different rebate rules (NRRP) apply — don’t assume “rebate included,” and have your lawyer confirm before you sign.
💡 If you’re a first-time buyer purchasing new, 2026 adds a real lever. Under the federal government’s Bill C-4 (received Royal Assent in March 2026, applying to purchase agreements signed on or after March 20, 2025), a First-Time Home Buyers’ GST Rebate on new homes rebates 100% of the federal GST on homes priced up to $1 million, phasing down on a straight line from $1M to $1.5M, with no rebate at or above $1.5 million — a maximum saving of about $50,000 (Source: PwC Canada / Fasken, 2025). On top of that, the Ontario 2026 Budget proposes an enhanced HST rebate on new housing for qualifying owner-occupied new homes. Both apply only to new builds — resale buyers get none of it, which is a concrete price advantage for new construction.
Tarion warranty: new builds get 1/2/7 years; resale gets none
• 1 year: defects in work and materials, Building Code violations, unauthorized substitutions
• 2 years: defects in electrical, plumbing and heating systems, plus water penetration through basement or foundation walls
• 7 years: major structural defects (MSD)
There’s also deposit protection before you close: per Tarion, a freehold deposit is covered up to $60,000 if the price is $600,000 or less, or 10% of price up to $100,000 above that; condo deposits are protected by the Condominium Act’s trust provisions, with a warranty backstop up to $20,000. A resale carries no Tarion warranty — the home’s condition is “as-is,” and it’s on you.
Closing costs: the new-build extras vs. resale’s LTT-only
• Development and education levy adjustments: municipal development charges the builder passes on at closing — potentially five figures. Many contracts now let you cap these, so have your lawyer confirm the capped number before you sign.
• Condo occupancy fee: the monthly charge during the interim occupancy period on a pre-con condo (see next section).
• Tarion enrolment, utility hookups, extra legal review, and similar.
By contrast, a resale closing is mostly LTT + legal fees + inspection + closing adjustments — simpler and more predictable. Before you sign on a pre-con, have your lawyer read every cap clause line by line — don’t judge by the sticker price.
🚨At a pre-con closing, builders often add a bundle of costs — development / education levy adjustments, Tarion enrolment, utility hookups — that can total five figures. Many contracts let you cap these, but only if you negotiate it. Have your lawyer read every clause and lock the cap in writing before signing, or an unbudgeted charge can blow up your closing day.
The pre-con condo "two-date trap": interim occupancy + occupancy fee
⚠️On a pre-con condo you pay a monthly occupancy fee during interim occupancy, and none of it reduces your mortgage principal. Interim periods commonly run 6–24 months or longer (Tarion / industry, 2026). Budget this “phantom rent” as its own line — getting the keys is not the same as starting your mortgage.
Certainty & condition: wait + delay risk vs. move now + known state
Resale: you can see and touch it, close in weeks, and move into a mature neighbourhood now — real backyards, grown trees, established streets. The condition is what-you-see-is-what-you-get, but systems may be ageing (roof, furnace, wiring), so a home inspection is how you price that risk. New build / pre-con: modern, efficient, customizable — but you wait 1–3 years or more, with real closing-delay risk (builders can extend under the contract). New homes also come with settling issues — hairline cracks, paint gaps, and a lot of “builder beige” sameness — and the neighbourhood and landscaping take time to mature. In short: resale buys certainty and maturity; new build buys newness and a blank canvas — at the cost of time and uncertainty.
Decision framework: match it to your situation
• Need to move in now, cash is ready as a lump, want low hassle → lean resale (immediate occupancy, predictable costs, inspection as a backstop).
• Not in a rush, can wait 1–3 years, want brand-new + the first-time buyer GST rebate → lean new build / pre-con (staged deposits, Tarion warranty, tax leverage).
• First-time buyer, price-sensitive, buying new to live in → run the Bill C-4 federal GST rebate + Ontario’s enhanced rebate; the new-build net price can be very competitive.
• Want stable cash flow, wary of occupancy fees and delays → favour resale, or a completed brand-new (move-in-ready) home to skip the pre-con interim period.
This article is educational; confirm tax, rebate eligibility, warranty and contract terms with the CRA, Tarion, and your own real estate lawyer.
Ontario Home Buying Guide →Pre-Construction Buying Guide →Closing Costs in Ontario →
Frequently Asked Questions
How much more deposit does a new build (pre-con) need vs. a resale?
The cash structure is completely different. Resale: about 5% as a single deposit on a firm offer, with the balance financed at closing. Pre-construction: typically a series of deposits totalling roughly 15–20% over the first year or two after signing. So pre-con ties up more cash, earlier, but spread out; resale needs a smaller deposit but the full balance ready on a short timeline.
Do I pay HST on a resale? And do I have to claim the new-home rebate myself?
A resale of a used, owner-occupied home is generally not subject to HST; a brand-new home is subject to 13% HST. Per the CRA (2026), the standard rebate is up to about $6,300 federally and up to $24,000 provincially — but the builder’s price usually has the rebate baked in and you assign it to the builder, so you don’t typically claim it separately. Buying new to rent falls under different NRRP rules and must be confirmed on its own.
How much tax can a first-time buyer save on a new build? Does resale get the same?
Under federal Bill C-4 (received Royal Assent in March 2026, applying to purchase agreements signed on or after March 20, 2025), a first-time buyer of a new home can get 100% of the federal GST rebated on prices up to $1M, phasing down to $1.5M, for a maximum saving of about $50,000 (Source: PwC / Fasken, 2025); Ontario’s 2026 Budget adds an enhanced new-housing HST rebate. These apply only to new builds — resale buyers get none of it, which is a real price advantage for new construction.
What does the Tarion warranty on a new build actually cover, and does resale get anything similar?
Per Tarion (tarion.com, 2026), Ontario new homes carry a mandatory warranty: 1 year for workmanship and materials, 2 years for electrical/plumbing/heating systems and basement water penetration, and 7 years for major structural defects, plus deposit protection before closing. A resale carries no Tarion warranty — it’s bought as-is, which is why a professional home inspection matters more on resale to surface roof, furnace and wiring risks early.
What is a pre-con condo "occupancy fee" and how long does it last?
Under Ontario’s Condominium Act, a pre-con condo has an interim occupancy period before title registers: you move in but haven’t closed, and you pay the builder a monthly occupancy fee (“phantom rent”) — interest on the unpaid balance + estimated property taxes + estimated maintenance — that does not go toward your mortgage principal. Interim periods on Toronto high-rise condos commonly run 6–24 months, longer on large projects. A resale has none of this, and it’s the cost most often left out of a buyer’s budget.
Arthur Zhao
Real Estate Broker · FRI · ABR · SRS · PSA · MCNE · E-PRO · GUILD Elite
VP & Branch Manager, Bay Street Group Inc.
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