Assignment Sale

In an assignment, the original buyer (assignor) transfers their agreement of purchase and sale to a new buyer (assignee) before the builder deal completes. The assignee typically pays:

1. Reimbursement of the assignor's deposits already paid to the builder (often 15–20% of the original price), plus
2. The assignment amount — the premium (or discount) versus the original contract price.

The assignee then completes the builder closing later: paying the balance, land transfer tax on the effective full price, and the builder's closing adjustments.

Almost every builder agreement restricts assignments: consent is required, a fee applies (commonly $1,500–$5,000+, sometimes a percentage), marketing the assignment publicly (MLS, social media) may be prohibited without written permission, and some builders bar assignments entirely until a sales threshold is hit. Violating these clauses can put the assignor's deposits at risk — read the clause before you plan the exit.

HST: since May 2022, virtually all assignment sales of new residential property in Canada are HST-taxable supplies. HST applies to the assignment consideration — and the parties' contract must be clear about whether the price is HST-included or plus-HST, because the difference is 13% of real money in Ontario.

Income vs. capital gains: CRA scrutinizes assignments heavily. Flipping a pre-construction contract you never intended to occupy is routinely assessed as fully taxable business income — not a 50%-inclusion capital gain — and Canada's anti-flipping rules deem quick residential dispositions to be income in most cases. The 'I'll just assign it and pocket the gain' plan can lose a third or more of the profit to tax that was never budgeted.

New-home HST rebates: an assignee who intends to occupy may still access the new-housing rebate; an investor assignee generally must pay it at closing and reclaim via the rental rebate with a one-year lease. Everyone in an assignment — both sides — should price the deal net of professional tax advice, not before it.

Assignors typically assign because life changed (financing capacity, family, relocation) or because closing costs at final closing (development charges, HST treatment, mortgage rates) no longer work. Assignment markets are thin and discount-prone in soft markets: when many units in a project assign at once, assignees demand discounts to the original price, and the assignor's deposits absorb the hit.

Alternatives worth pricing before assigning:

• Close and lease: complete the purchase, rent the unit, exit later on the resale market — often better economics if you can finance it.
• Close and sell on MLS: resale exposure usually beats the restricted assignment market when the numbers are close.
• Negotiate with the builder: extensions, deposit restructures, or consent terms.

For assignees, assignments can be genuine value — buying at yesterday's price band with a shorter wait — but only with the builder agreement, the disclosure statement, all amendments, and the tax treatment reviewed by a lawyer before signing.