Quick answer: An assignment sale is when a pre-construction buyer (the assignor) sells their purchase contract to someone else (the assignee) before closing. The assignee takes over the agreement and repays the original deposit, often plus a profit. In Ontario:
- You usually need the builder's written consent and must pay an assignment fee.
- HST generally applies to the assignment price on agreements made on or after May 7, 2022.
- Profits on rights held under 365 days can be taxed as full business income.
Assignments let pre-construction buyers exit before closing, and let other buyers get into a project that's sold out or nearly finished. They can work well for both sides. They also involve contract rules, tax traps and deposit math that catch people off guard. Here's how they work in Ontario in 2026.
How does an assignment sale work?
- Check your agreement. Your agreement of purchase and sale (APS) says whether assignments are allowed, when, and at what fee. Some builders don't allow them at all, or only after a set point, such as after most units have sold.
- Get the builder's consent. Most builders require written approval and their own assignment paperwork.
- Find a buyer. Many builders restrict advertising, including MLS listings, so assignments are often marketed privately or with conditions. Check your APS first.
- Sign the assignment agreement. It sets the assignment price and states the deposit repayment amount in writing.
- The assignee closes with the builder, paying the remaining balance and closing costs.
How the money works: a worked example
Illustrative only.
| Amount | |
|---|---|
| Original price with builder | $650,000 |
| Deposits paid by original buyer | $130,000 |
| Assignment price (deposit repayment + profit) | $180,000 |
| Original buyer's gross profit | $50,000 |
| Assignee still owes the builder at closing | $520,000 + closing costs |
The assignee's total cost is the $180,000 assignment price plus the $520,000 balance, which comes to $700,000 before closing costs.
What does an assignment cost the original buyer?
- Builder's assignment fee plus the builder's legal fees. This varies widely by builder and is set out in your APS or the builder's assignment policy.
- Real estate commission, if an agent sells it
- Your own legal fees
- HST on the assignment (see below)
- Income tax on the profit
Do you pay HST on an assignment in Ontario?
Generally, yes. For agreements to buy a new home from a builder entered into on or after May 7, 2022, an assignment is treated as a taxable sale under the Excise Tax Act. That means 13% HST in Ontario.
The key detail is the deposit. HST applies to the assignment price, but the deposit repayment portion is excluded only if the assignment agreement identifies it in writing. Using the example above:
| How the agreement is written | HST charged on | HST |
|---|---|---|
| $130,000 deposit identified in writing | $50,000 | $6,500 |
| Deposit not identified | $180,000 | $23,400 |
One sentence in the agreement makes a $16,900 difference. Make sure your lawyer drafts it correctly.
How is assignment profit taxed?
Since January 1, 2023, the federal residential property flipping rule treats profit from selling housing, including assignment rights, held for less than 365 days as fully taxable business income. It doesn't get the partial inclusion of a capital gain, and losses are deemed to be nil. There are exceptions for some life events, such as death, separation, serious illness, involuntary job loss or relocating for work.
Even after 365 days, the CRA can treat the profit as business income depending on your intentions and history. The CRA has a long record of auditing Toronto condo assignments. Report the sale and talk to an accountant.
Assignments and the 2026 HST rebate
This catches many investors. The expanded HST rebate depends on the person who closes living in the home (or a close relative living there) or renting it long-term. If your price was "HST included, net of rebates" and you assign the contract, the rebate goes with whoever closes and qualifies. If the assignee doesn't qualify, someone has to pay that amount at closing, and it could be as much as $130,000. Your assignment agreement and lawyer need to deal with this directly.
Buying an assignment: what to check as the assignee
- ☐ The builder has consented in writing
- ☐ The deposit repayment amount is stated in the assignment agreement
- ☐ You've reviewed the original APS: closing cost caps, occupancy dates, HST clause
- ☐ Your mortgage covers the full original price, and you've planned for an appraisal gap
- ☐ You've budgeted land transfer tax. The assignee generally pays it at final closing, based on the total value including the assignment price. In Toronto, the municipal land transfer tax applies too.
- ☐ You know whether you qualify for the HST rebate yourself
- ☐ You've confirmed whether the original buyer is released from the contract, or stays liable if you don't close
Why buy an assignment?
- Get into a sold-out project or a preferred floor plan or view
- Move in sooner than a new launch would allow
- Buy at a price that may be below the builder's current release prices
Related reading: Pre-Construction Deposits in Ontario · How to Buy Pre-Construction in Ontario · Pre-Construction Closing Costs
Frequently asked questions
What is an assignment sale in Ontario?
It's the sale of a pre-construction purchase contract before closing. The original buyer transfers their rights and obligations to a new buyer, who repays the deposit (often plus a profit) and closes with the builder.
Can I assign my pre-construction condo?
Only if your agreement allows it. Most require the builder's written consent and an assignment fee, and some restrict when or how you can market it.
Is HST charged on assignment sales?
Generally, yes, for builder agreements made on or after May 7, 2022. HST applies to the assignment price. The deposit portion is excluded only if the assignment agreement states it in writing.
How is profit from an assignment taxed?
If you held the rights for less than 365 days, the profit is generally fully taxable as business income under the flipping rule, unless an exception applies. After 365 days, it can still be business income depending on the facts.
Who pays land transfer tax on an assignment?
The assignee, at final closing. It's generally based on the total value, including the assignment price. In Toronto, the municipal land transfer tax also applies.
Can I lose the HST rebate by assigning?
The rebate depends on who closes and how the home is used. If the assignee doesn't qualify and the price was "net of rebates," the rebate amount may become payable at closing. Deal with this in the assignment agreement.
About the author: Ola Otubu is a REALTOR® with Realty ONE Group Reveal, Real Estate Brokerage, and the founder of Buyprecon.ca. He represents buyers of new construction homes and condos across Ontario, from the first deposit through PDI, closing and warranty claims.
This article is general information, not legal or tax advice. Assignment terms vary by builder, and tax outcomes depend on your situation. Speak with a real estate lawyer and an accountant before assigning or buying an assignment. Sources: Excise Tax Act s. 192.1; Income Tax Act ss. 12(12)–(14); Canada Revenue Agency.
Thinking of assigning, or buying an assignment?
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