Published 12 November 2026 · By Jatin Dua, Broker of Record, RE/MAX Quantum Realty
If you bought a pre-construction condo and you are thinking of assigning it rather than closing, there is one rule you need to understand before you price the deal. It changed in 2022, it applies to essentially every residential assignment, and getting it wrong means handing over 13% of money you thought was yours.
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Effective May 7, 2022, all assignment sales in respect of newly constructed or substantially renovated residential housing are taxable for GST/HST purposes.
Before that date, whether your assignment was taxable depended on an analysis of whether you counted as a “builder” — broadly, whether you had acquired the interest with the intention of reselling it, as a business or an adventure in the nature of trade. An individual who genuinely bought to live in the unit and then had a change of circumstances could often assign on an exempt basis.
That analysis no longer determines the outcome. The assignment is taxable.
The part that costs people money
Where an assignment is taxable, GST/HST applies to the full amount the assignor receives — including the deposit they had already paid to the builder.
Read that twice, because it is counter-intuitive and it is the single most expensive misunderstanding in this corner of the market.
CRA’s own example makes it concrete: a first purchaser who paid a $10,000 deposit and assigns the agreement for $15,000 owes tax on the full $15,000 — not on the $5,000 of profit. And labelling part of the payment “recovery of deposit” in the assignment agreement does not change that.
So if you paid $100,000 in deposits and assign for $130,000, you are not being taxed on a $30,000 gain. You are being taxed on $130,000.
What that does to the arithmetic
Consider deposits of $100,000 and an assignment at $130,000, with HST at 13%:
- What the assignee pays you: $130,000
- HST on the full consideration: roughly $16,900
- Your deposits back: $100,000
- Before the builder’s assignment fee, legal fees and commission, your gross margin is $30,000 — against an HST liability of $16,900.
More than half the apparent profit is tax. Add a builder assignment fee, which is often several thousand dollars and sometimes a percentage, plus legal and brokerage costs, and a deal that looked like a $30,000 win can be close to nothing.
The practical consequence: whether you charge the HST to the assignee on top, or absorb it, must be settled explicitly in the assignment agreement. Silence on the point is a dispute waiting to happen, and the CRA will look to the person who made the supply.
The rebate asymmetry
Two further points that matter to how you price:
- The assignor generally cannot claim the GST/HST new housing rebate. You are not the one who ends up occupying the home.
- An individual assignee may be eligible. Where there are effectively two builders in the chain, the assignee pays GST/HST to both the original builder and to you. Only one rebate application is permitted per house, so the assignee can file directly with the CRA and include the tax paid to both parties.
That last point is genuinely useful in a negotiation. An assignee who understands they can recover some of this through the rebate process values the deal differently from one who does not.
Two things that are not about tax
The builder has to let you. Most pre-construction agreements restrict assignment: consent required, a fee payable, sometimes a prohibition until a percentage of the project is sold, often a bar on marketing the unit publicly. Read your assignment clause before you spend anything on this.
Income tax is a separate question. GST/HST and income tax are different regimes. Whether your profit is a capital gain or fully taxable business income depends on your circumstances and intention, and the CRA has paid close attention to this sector. Do not assume capital gains treatment.
Before you assign
- Read the assignment clause and get the builder’s written consent terms and fee in advance.
- Speak to an accountant before you agree a price, not after.
- State clearly in the assignment agreement who bears the GST/HST.
- Model the deal on the full consideration, not the profit.
- Get a lawyer to draft or review the assignment. These are not standard-form transactions.
The honest summary
Assignments still make sense in the right circumstances — a genuine change of plan, a unit that has appreciated meaningfully, a buyer who wants it. But the 2022 change removed the exemption that made small assignments worthwhile, and the tax lands on the whole amount rather than the gain. Run the real numbers first.
General information about how the rules work, not tax or legal advice. CRA’s published guidance on this area has been updated and some older examples reflect the previous framework. Get advice from an accountant and a lawyer on your own transaction.
Sources
- CRA GI-120 — Assignment of a Purchase and Sale Agreement for a New House or Condominium Unit
- CRA Notice 323 — GST/HST Treatment of Assignment Sales
- CRA RC4028 — GST/HST New Housing Rebate
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