Assignment Sales in Ontario, Explained
Quick answer
An assignment sale is when the original buyer of a pre-construction home (the assignor) sells their purchase contract to a new buyer (the assignee) before the building closes. The assignee takes over the deal and pays the assignor their deposits plus any negotiated profit. Assignments need the builder's consent and usually an assignment fee, and they carry specific HST and income-tax implications — get legal and tax advice first.
How an assignment works
Instead of buying a finished home, the assignee buys the right to complete someone else's pre-construction contract. At final closing they close directly with the builder and take title.
Costs and consent
- Builder consent — most agreements require it and charge an assignment fee
- You repay the assignor's deposits plus any profit
- Legal fees for both sides
- Real estate commission, if an agent is involved
HST and tax — get advice
Assignments can trigger HST on the assignment amount and the profit may be taxed as business income rather than a capital gain. The rules are nuanced — always confirm with a real estate lawyer and an accountant before signing.
Key takeaways
- An assignment sells the contract, not a finished home.
- The builder must usually consent and charges a fee.
- The assignee repays deposits plus any profit.
- HST and income-tax treatment need professional advice.
Frequently asked
What is an assignment sale?+
Selling your pre-construction purchase contract to a new buyer before the building closes, so they complete the deal with the builder.
Do you pay HST on an assignment?+
Often yes — HST can apply to the assignment, and profit may be treated as business income. Confirm with a lawyer and accountant.
Why buy an assignment?+
To get into a project that's sold out or near completion, sometimes below current market, without waiting years from the original launch.