*Harmonized Sales Tax (HST)
PEI has a Harmonized Sales Tax, which is essentially a combination of the GST (5%) and PST (9%). The HST is 14% and is only payable on the sale of brand new properties or properties that have been substantially renovated.
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Closing costs in Prince Edward Island
See how much you might pay in closing costs when you buy a home in P.E.I.
The average closing cost in Prince Edward Island (PEI) is roughly $3,000 after taxes or approximately 1-2% of the final home sale price.
Closing cost stats in PEI
- Average home sale price: $210,000-$220,000
- Average total closing cost: $3,000*
- Expected closing cost range: $2,100-$4,400*
- Percentage of closing cost to home sale price: 1-2%
Remember, these averages are based on sample data. Your closing costs may vary based on your lender, the size of your loan and whether you’re paying in cash.
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How much does tax affect the closing cost?
Buyers in PEI are fortunate to pay a nominal amount in taxes on the closing cost through a Real Property Transfer Tax (RPTT). In PEI, this RPTT amounts to either 1% of the purchase price or 1% of the assessed value, whichever is higher. For example, if the assessed value on the house you’re buying is $250,000 but you end up paying $240,000, you would need to pay the 1% tax on the assessed value which, in this case, would amount to $2,500. Please note that this does not include the 14% Harmonized Sales Tax (HST) that is enforced on the sale of new properties in PEI.
Is there an HST rebate?
PEI does not offer the same home buyer HST rebate offered by other provinces. But you may be able to get a rebate through the New Home Construction Incentive, which offers either $2,000 or $5,000 depending on how far the design of your home exceeds basic energy efficiency standards. This is only for those who are constructing their home – you’re not eligible if you’re merely purchasing a preexisting home. Learn more on PEI’s provincial government website.
How do closing costs in PEI compare with the rest of Canada?
The closing costs for buying a home in PEI are among the lowest in Canada because of its low average housing prices. Unlike a few other provinces in Canada that only charge the GST on the sale of new properties, PEI charges HST, a higher tax rate, that can significantly drive up closing costs.
Bottom line
Closing costs are inevitable when you’re buying a property. The exact amount will vary depending on what the final sale price is on your property in Prince Edward Island. Not factoring in the HST, it is safe to budget 1-2% of the final sale price for closing costs as most of it will be going to the RPTT. In cases where you buy a brand new property, you will have to pay HST and this can raise your closing costs as high as 15-17% (not taking into account the rebate).
Want to learn more about mortgages? Head to our guide here.
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