Top 5 Costs New Homeowners Forget in Ontario (2027)

By Jatin Dua · Broker of Record, RE/MAX Quantum Realty · Updated 2 November 2026 · 10 min read — Five costs new Ontario homeowners often miss in 2027, with real numbers: catch-up tax bills, PST on CMHC premiums, Toronto’s vacant home tax and more.

This guide is for people who have just bought, or are about to buy, a home in Ontario and want to know which bills catch new owners off guard. You get the five costs I see missed most often, real 2026 numbers from official sources, and a simple plan for how much cash to keep aside in 2027.

What costs do new homeowners forget to budget for?

Most buyers plan for the down payment, land transfer tax and legal fees. The surprises tend to come later. Some bills arrive months after closing. Some taxes cannot be added to the mortgage. Some repairs are not covered by a standard insurance policy.

I have already broken down the regular first-year bills, from property tax rates in eight GTA cities to condo fees and water, in what the first year of owning a home really costs in the GTA. This post is different. It covers the five costs that new owners tell me they did not see coming:

• A catch-up property tax bill on a newly built home.
• Sales tax on mortgage default insurance, which you pay in cash.
• Toronto’s yearly Vacant Home Tax declaration.
• Basement flood protection that insurance may not cover.
• Higher payments when interest rates rise.

All numbers are as of November 2026. Tax rates, subsidies and insurance terms change, so check them again before you rely on them.

1. The catch-up property tax bill on a newly built home

If you buy a brand-new house, the tax you pay at closing may cover only part of the property. The City of Mississauga gives a plain example: when a house is newly built, the buyer may have paid tax only on the value of the vacant land at the time of purchase.

The Municipal Property Assessment Corporation (MPAC), the agency that values property for tax in Ontario, then assesses the finished house. Once MPAC sends the new value to the city, the city issues a supplementary tax bill for the added value. Mississauga says these bills can cover the current year and up to two previous years. For a new detached, semi-detached or townhouse, the start date is your closing date. Mississauga splits the bill into three instalments.

What a catch-up bill can look like

Here is an illustration only. Say MPAC adds $400,000 of assessed value for the house. At the City of Toronto’s 2026 residential tax rate of 0.767311%, that adds about $3,069 a year. If the bill covers two years, you could get roughly $6,138 at once. Your city’s rate and your assessment will be different, so ask your lawyer for real figures.

What to check

• Ask your lawyer whether the tax adjustment at closing covered the land only or the finished home.
• If your lender collects property tax with your mortgage payment, ask how it handles a supplementary bill.
• Keep the estimated amount in a separate savings account until the bill arrives.

Resale buyers see a smaller version of this. If the seller prepaid the year’s taxes, you pay back your share at closing through the statement of adjustments. My guide to closing costs on a new build in Ontario lists the other adjustments builders often charge.

2. Sales tax on mortgage default insurance, paid in cash

If your down payment is under 20%, your lender needs mortgage default insurance, often from CMHC. The premium is a share of your loan. It is 4.00% when you borrow more than 90% of the price, 3.10% from 85.01% to 90%, and 2.80% from 80.01% to 85%. The premium is usually added to your mortgage, so many buyers never think about it again.

The tax on the premium is a different story. CMHC says premiums in Ontario are subject to provincial sales tax and that this tax cannot be added to the loan. Ontario charges retail sales tax of 8% on taxable insurance premiums. That means you need the tax in cash, usually paid through your lawyer on closing day.

Source: median sold prices from TRREB MLS data via REALM, January–October 2026 (Toronto district C01 for downtown). Premium rates from CMHC; 8% retail sales tax from the Government of Ontario. My calculation at the minimum down payment and a 25-year amortization.

First-time buyers who choose a 30-year amortization pay 0.20% more in premium, which raises the tax a little too. On the $600,000 condo above, the premium becomes $23,730 and the cash tax about $1,898. My guide to CMHC insurance costs in Ontario walks through the full premium table.

3. Do Toronto homeowners have to declare for the Vacant Home Tax?

Yes, every year, even if you live in the home. The City of Toronto requires owners of residential property to tell the City whether the home was occupied or vacant. For the 2026 year, the deadline is 30 April 2027.

Missing it is expensive. If you do not declare, the City assumes the home was vacant and sends a Vacant Home Tax bill. Since 2024 the tax has been 3% of the property’s current value assessment. On a home assessed at $692,140, the figure the City uses for an average home, 3% is about $20,764. The City also says a false declaration, or not giving information it asks for, can bring a fine of up to $10,000 on top of any tax owed.

New owners miss this because nothing about it happens at closing. It is a separate step, months later, in the year when you are least likely to know about it. If you end up carrying two homes because you bought before you sold, the rules matter even more. I explain that case in buying before you sell in Toronto and the vacant home tax.

This program applies inside the City of Toronto only. If you bought elsewhere in the GTA, check your own city’s website for any similar rule.

4. Is basement flooding covered by home insurance in Ontario?

Often not by default. The Insurance Bureau of Canada (IBC) describes sewer backup and overland flooding as optional coverages you may be able to add to a home policy. Standard water damage cover usually means a sudden and accidental escape of water, such as a burst pipe. IBC also notes that freezing damage to indoor plumbing can be excluded if you are away for more than four days in the heating season and nobody drains the plumbing or checks the home.

Protection work costs money, but Toronto helps pay for it. For work done on or after 12 November 2025, the City’s Basement Flooding Protection Subsidy pays 80% of the invoiced cost, up to $6,650 per property.

Source: City of Toronto, Basement Flooding Protection Subsidy Program, page updated June 2026. Expanded amounts apply to work completed on or after 12 November 2025.

A backwater valve needs a building permit. For work at the expanded amounts, you apply within two years of installation. You still pay the other 20% and anything above the caps. If water does get in, my guide on what to do when your basement floods in Toronto covers the first steps.

5. How much does a rate hike add to my mortgage payment?

On a variable-rate mortgage, the change hits right away. On 28 October 2026 the Bank of Canada raised its policy rate by 0.25 points to 2.50%, its first increase in more than three years. The big banks raised prime from 4.45% to 4.70%, effective the next day.

By my estimate, a 0.25 point increase adds roughly $84 a month on a $600,000 variable mortgage over 25 years, or about $1,000 a year. Some variable mortgages keep the payment the same and put more of it toward interest instead, which stretches out the time to pay off the loan.

The Bank said another increase could be needed and that it will decide one meeting at a time. Its next decision is on 9 December 2026. Nobody can promise where rates go in 2027, me included. If you are on a fixed rate, your payment is set for the term, but your renewal may look different. I show the math in what a rate hike does to a variable payment.

How much cash should a new homeowner keep aside in 2027?

There is no single right number, because it depends on the home and how you financed it. What I do with buyers is simple: list the five items above and put a dollar figure next to each one for that specific home.

What to do next

1. Before closing, ask your lawyer whether the property tax adjustment covers the finished home or only the land.
2. Get the exact default insurance premium from your lender and add the 8% tax to your closing cash.
3. If you own in Toronto, set a reminder to make your Vacant Home Tax declaration by 30 April 2027.
4. Call your insurer and confirm sewer backup and overland water coverage, with limits, in writing.
5. Run your budget through the affordability calculator on this page with a rate 0.5 points higher than today.

Frequently asked questions

Sources

• City of Mississauga – Supplementary tax bill
• City of Toronto – Property tax rates and fees
• CMHC – Mortgage loan insurance cost
• Government of Ontario – Retail sales tax: insurance and benefits plans
• City of Toronto – Vacant Home Tax
• Insurance Bureau of Canada – Types of home coverage
• City of Toronto – Basement Flooding Protection Subsidy Program
• Bank of Canada – Policy rate announcement, 28 October 2026

Related reading

• Top 5 Best Neighbourhoods to Live in Mississauga in 2027
• Top 5 Best Neighbourhoods to Live in Brampton in 2027
• Top 5 Best Neighbourhoods to Live in Markham in 2027
• Top 5 Best Neighbourhoods to Live in Oakville in 2027