Assignment Sale.
Net cash on a pre-construction assignment — markup, HST, builder consent fee, and the anti-flipping rule that catches most amateur assignors.
Three rule changes, still surprising buyers.
Pre-construction assignments used to be the quiet liquidity mechanism for Toronto investors. Three rule changes in 2022–2023 reshaped the math.
HST is now always chargedon the assignment fee. Before May 7, 2022, it depended on the assignor’s intent — personal use was usually exempt. CRA Notice 323 closed that distinction. The deposit-recovery portion is excluded from HST only if the assignment agreement itemizes it in writing — draftsmanship matters.
The anti-flipping rule(federal, Jan 1, 2023) deems any profit on a property — including an assignment — sold within 365 days of acquisition as 100% taxable business income. There is no capital-gains option for sub-365-day assignments. Holding longer doesn’t automatically open the capital-gains door, but it’s a precondition.
The federal Prohibition Actblocks non-Canadians from taking assignments through Jan 1, 2027. NRST still applies at registration to the assignee, regardless of the assignor’s status. International buyers should consult counsel before signing into an assignment.
Frequently asked.
What is an assignment sale?
An assignment is a resale of a pre-construction Agreement of Purchase and Sale (APS) before the unit closes. The original buyer (assignor) transfers their right to purchase the unit at the original price to a new buyer (assignee), in exchange for the original deposits plus a markup ("the assignment fee"). Title never transfers to the assignor — only the contractual right does. At final closing, the assignee takes title directly from the builder.
Is HST charged on an assignment sale?
Since May 7, 2022, yes — every assignment of a new or substantially renovated single-unit residential property or condo unit is a taxable supply. CRA Notice 323 made this rule retroactive to all assignments after that date, regardless of the assignor's intent (personal-use vs. commercial). The HST rate is 13% in Ontario.
Is HST charged on the deposits I get back, too?
It depends on the assignment agreement. CRA: HST is charged on the FULL assignment consideration UNLESS the agreement explicitly itemizes the deposit-recovery portion in writing. If the deposit recovery is identified, HST applies only to the markup. Otherwise, HST is charged on deposits + markup combined. The calculator toggles this with the "deposit recovery itemized" checkbox.
Is my profit on the assignment a capital gain or business income?
CRA's default position is business income (100% taxable). The federal anti-flipping rule (effective Jan 1, 2023, ITA s.12(13)-(14)) extended to assignments deems profit on any assignment within 365 days of the original APS as business income, with no capital-gains option. Holding longer than 365 days does not automatically grant capital-gains treatment — the taxpayer still has to substantiate that the purchase was not business-motivated. Speak with your accountant.
How much is the builder consent fee?
Not statutory; varies by builder. Common range: $1,000–$6,000 flat OR 0.5%–2% of the original APS price. Some builders waive it as a sales incentive, others gate assignments until the project is 75%+ sold. Always check your APS for the consent clause and fee schedule before you commit to assigning.
Does the HST New Housing Rebate transfer with the assignment?
Yes — eligibility for the rebate is determined by the date the ORIGINAL APS was signed (between the first buyer and the builder), not the assignment date. The assignee inherits the rebate eligibility at the original price tier. Important: the rebate applies to the BUILDER base price, not the higher assignment price. HST charged on the assignment markup itself is separate and is NOT eligible for the new housing rebate.
What if the assignee is a non-Canadian?
A non-Canadian assignee is blocked from completing the assignment under the federal Prohibition on the Purchase of Residential Property by Non-Canadians Act (in effect Jan 1, 2023, extended to Jan 1, 2027). NRST applies on the assignee at registration to title — the assignor doesn't pay NRST. The federal Prohibition Act has its own enforcement and exceptions; consult counsel.
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