Cannot close your assignment sale? The HST sentence, the flipping rule, and the protections that do not apply to you

Last updated 1 September 2026. Written by Jatin Dua, Broker of Record at RE/MAX Quantum Realty, 799 The Queensway, Etobicoke — Every provision below was read from the Justice Laws Website or from the regulator’s own publication on 1 September 2026, and where a source contradicts itself or another regulator I have said so. Every figure below is sourced, dated and traceable to a primary source.

You bought pre-construction, the market moved, and you are now trying to assign the agreement to someone else rather than close. Or you found an assignee and the deal is coming apart. Either way, three things are about to matter far more than the price you agreed, and almost nobody explains them before the paperwork is signed.

1. The drafting error that costs tens of thousands in HST

This is the single most expensive mistake in an Ontario assignment and it is a matter of one sentence in the assignment agreement.

Since 7 May 2022, every assignment of a new-housing purchase agreement by anyone other than the builder is a taxable supply. That is section 192.1 of the Excise Tax Act, enacted by the Budget Implementation Act, 2022, No. 1. It applies, in CRA’s words, to “any supply by way of assignment of an agreement of purchase and sale if the supply is made after May 6, 2022.”

Before that date, whether HST applied turned on what you intended when you signed the original agreement. After it, intention is irrelevant. It is taxable by deeming.

Now the part that decides the number. Section 192.1(b) sets the taxable consideration by a formula, A minus B, where A is the assignment price and B is:

“(i) if the other agreement indicates in writing that a part of the consideration for the other supply is attributable to the reimbursement of a deposit paid under the purchase agreement, the part of the consideration… that is solely attributable to the reimbursement of the deposit paid under the purchase agreement, and (ii) in any other case, zero.”

A CRA document that contradicts itself

You may be shown GST/HST Info Sheet GI-120, which is CRA’s older guidance on assignments. Its banner carries the correct rule: “Effective May 7, 2022, all assignment sales in respect of newly constructed or substantially renovated residential housing are taxable for GST/HST purposes.” But the body was never rewritten. It still contains a worked example concluding that on a $15,000 amount “tax applies to the full $15,000” and still describes the pre-2022 primary-purpose analysis.

That example is inconsistent with section 192.1 for any assignment agreement entered into on or after 7 May 2022. GI-120 is still useful for the definition of “builder” and for the rebate point below. It is not reliable on deposits. If your accountant is working from it, say so.

Who remits, and one trap for non-residents

CRA: “The assignor in respect of a taxable assignment sale would generally continue to be responsible for collecting the GST/HST and remitting the tax to the Canada Revenue Agency.” That is you. But where the assignor is a non-resident of Canada, “the assignee would continue to be required to self-assess and pay the GST/HST directly to the CRA.” If you are buying an assignment from someone who lives abroad, that obligation is yours.

2. You lose the new housing rebate, and there is only one per house

CRA states it directly in GI-120: an assignor “would not be eligible for either a GST/HST new housing rebate or provincial new housing rebate as they did not acquire the house for use as their primary place of residence.”

The reason is structural rather than punitive. The rebate is conditioned on occupying the home as a primary place of residence, which an assignor by definition never does. It was never yours to lose in the sense people imagine, but it is a real number disappearing from the deal.

And the assignee cannot double up. CRA: “Only one new housing rebate application can be made for each new house.” The assignee also computes their rebate on the larger total — the tax and consideration paid to the builder plus the tax and consideration paid on the assignment — which CRA notes “may affect the amount of a GST/HST new housing rebate.” Because the federal rebate phases out as consideration rises, an assignment can reduce or eliminate the assignee’s rebate. That is a negotiating point and it should be priced.

3. The flipping rule has no exception for the reason you are actually assigning

Most people assume that if they assign at a loss, or assign because they genuinely cannot close, the tax system will treat them sympathetically. It does not.

Subsection 12(12) of the Income Tax Act deems a gain on a “flipped property” to be business income and denies the principal residence exemption. Subsection 12(13) defines flipped property to include property held “for less than 365 consecutive days prior to its disposition” that is, in paragraph (a), either “a housing unit located in Canada” or “a right to acquire a housing unit located in Canada.”

That second limb is what pulls assignments in. The clock runs on how long you held the right — the pre-construction agreement — not on ownership or occupancy of anything. The Department of Finance’s April 2023 explanatory notes confirm it: profits on an assignment “would be deemed to be business income if the rights to purchase a property were assigned after having been held for less than 12 months,” applying to dispositions after 2022.

The nine exceptions, and what is missing from them

Paragraph 12(13)(b) lists the life events that take a disposition out of the deeming rule:

1. Death of the taxpayer or a related person
2. A related person joining the household, or the taxpayer joining a related person’s household
3. Breakdown of a marriage or common-law partnership, with at least 90 days living separate and apart before the disposition
4. A threat to personal safety
5. Serious illness or disability
6. An eligible relocation
7. Involuntary termination of employment
8. Insolvency of the taxpayer
9. Destruction or expropriation of the property

Two further points that get missed. An exception takes you out of the deeming rule; it does not convert the profit into a capital gain. The ordinary business-versus-capital analysis then applies on its own terms, and for a pre-construction assignment it frequently still lands on business income.

And subsection 12(14) provides that “a taxpayer’s loss from a business in respect of a flipped property is deemed to be nil.” If you assign at a loss inside 365 days, the loss is denied outright. There is no deduction and no carry-forward.

What the regulators do not cover, which is most of this

Ontario has an unusually complete consumer-protection architecture for pre-construction. Tarion deposit protection, the mandatory Tarion Addendum, HCRA’s Code of Ethics, the Condominium Authority of Ontario’s statutory buyers’ guide. I read all of them for this page.

The consequence is simple and worth stating plainly: the fee, the consent standard, the marketing restrictions and the eligibility conditions all live in the builder’s own Agreement of Purchase and Sale. They are negotiable at the front end and effectively never negotiable afterwards. If a number for a “typical” assignment fee is quoted to you, ask where it is published. It is not.

Where the protections do bite — and the carve-out that excludes you

Tarion deposit protection covers up to $20,000 on a condominium unit. For freehold agreements entered into from 1 January 2018 it is up to $60,000 where the price is $600,000 or less, and ten per cent of the price to a maximum of $100,000 above that. The three triggers are: the builder goes bankrupt, the builder fundamentally breaches the agreement, or you have a statutory right to treat the agreement as terminated.

The Tarion Addendum makes the asymmetry explicit. Its termination right applies where occupancy has not been given by the Outside Occupancy Date “for any reason (other than breach of contract by the Purchaser).” A buyer already in default cannot use the delay provisions as an exit.

The ten-day cooling-off period, and a disagreement between two regulators

A pre-construction condominium purchaser in Ontario has a ten-day right to rescind under section 73 of the Condominium Act, 1998. When the ten days start is where the sources part company.

Those are different trigger dates and they can differ by weeks. CAO is the regulator with the condominium mandate and its guide is the document the statute requires a declarant to deliver, so I would prefer CAO’s formulation — but the discrepancy is real, it is between two Ontario regulators, and you should know both exist before you rely on either. Separately, HCRA says ten calendar days, and a Tarion page elsewhere says ten business days; CAO and Ontario.ca both say simply ten days.

CAO also confirms the agreement is not binding at all until delivery is complete: “Your purchase agreement is not binding until you receive both the disclosure statement and Ontario’s Residential Condominium Buyers’ Guide from the builder.” There is a second, separate ten-day right where the disclosure statement is materially changed.

Your agent’s disclosure duties, and yours

RECO’s guidance on shadow-flipping sets out what a registrant must disclose. Registrants must disclose “any facts that you are aware of that affect, or could affect, the value of the property involved” and “any negotiations, offers or agreements that have been conducted about the future sale, lease or other transaction related to the property.” In multiple representation, a brokerage “would have to disclose the buyer’s intention to assign the Agreement of Purchase and Sale.”

RECO frames the wrongdoing as concealment: lack of disclosure is what makes it shadow flipping. Two caveats on that article, in fairness: it carries no publication date, and it cites REBBA 2002, which has been replaced by TRESA. The duties it describes survive the change; the section numbers do not.

How common is this? Nobody publishes it

I searched Urbanation, Altus and BILD, TRREB, CMHC and Statistics Canada for assignment volumes, assignment share of transactions, or assignment failure rates in the GTA. There is no published figure. That is explicable: builders routinely prohibit MLS listing of assignments in their own agreements, so assignments never enter TRREB’s transaction data, and no regulator collects them. Every assignment statistic I encountered came from brokerage marketing with no stated method.

What is published, and what is on point, is Urbanation’s Q3 2025 release: ten projects totalling 2,499 units cancelled in the quarter and 4,040 units year to date, against a previous record of 3,598 units in all of 2018. New condominium sales in Q3 2025 were 319 units, the lowest quarterly total since Q3 1990.

What I would do, in order

1. Read the assignment clause in your original agreement first, before you talk to anyone about price. It contains the fee, the consent standard, whether you may market the unit at all, and the conditions on eligibility. Nothing in Ontario law overrides it.
2. Ask the builder in writing whether it will consent, and what it will charge. Get the answer before you have a buyer, not after.
3. Have a lawyer draft or review the assignment agreement, specifically for the sentence allocating part of the price to reimbursement of your deposit. Section 192.1(b)(ii) makes that sentence worth more than the lawyer.
4. Get the income tax position in writing from an accountant before you agree a price. Whether this is business income changes what you net by a large margin, and the flipping rule may decide it for you.
5. Price the assignee’s lost or reduced rebate into the negotiation rather than discovering it at the table.
6. If no assignment is possible, get advice on the closing itself. The regulators publish nothing about buyer default, which means the terms of your agreement are the whole of the law on it.

What is not on this page

No case law. Ontario courts have decided cases about builder assignment clauses and about damages on a failed closing, and I have not read those decisions, so they are not here. No “typical” assignment fee, because none is published. No rebate arithmetic, because I did not verify the thresholds. And no view on whether an assignee inherits the cooling-off right, because no regulator has published one.

Frequently asked questions

Related reading

• No equity in your house? What happens when the sale will not cover the mortgage
• GTA pre-construction market report: Fall 2026
• Rental income tax and Form T776: the deductions and the CCA trap
• Section 116 and the non-resident seller: the certificate of compliance

Sources

Every figure on this page traces to one of these, and each was read on 1 September 2026. Primary sources only — statute, regulation, and the government or agency that administers the rule. Where I could not verify something from a primary source, the page says so instead of guessing.

• Excise Tax Act, section 192.1 — New housing, assignment of agreement. Justice Laws Website, Government of Canada, read 1 September 2026. Enacted by the Budget Implementation Act, 2022, No. 1, 2022, c. 10, s. 52. Deems every assignment of a new-housing purchase agreement by a person other than the builder to be a taxable supply, and sets the consideration by the formula A minus B, where B is the part attributable to reimbursement of a deposit only if the assignment agreement says so in writing, and zero in any other case. Accessed 1 September 2026.
• GST/HST Notice 323, Proposed GST/HST Treatment of Assignment Sales — CRA. Canada Revenue Agency, May 2022. States that section 192.1 applies to any assignment supply made after 6 May 2022, that the assignor generally collects and remits the tax, that a non-resident assignor triggers self-assessment by the assignee, and that only one new housing rebate application can be made for each new house. Accessed 1 September 2026.
• GST/HST Info Sheet GI-120, Assignment of a Purchase and Sale Agreement for a New House or Condominium Unit. Canada Revenue Agency, published July 2011, last modified 7 July 2022. Source for the statutory definition of builder that captures ordinary individuals, and for the statement that an assignor is not eligible for a new housing rebate because they did not acquire the house for use as their primary place of residence. Its worked example on deposits was not rewritten after May 2022 and is inconsistent with section 192.1. Accessed 1 September 2026.
• Income Tax Act, subsections 12(12) to 12(14) — flipped property. Justice Laws Website, Government of Canada, read 1 September 2026. Deems a gain on a flipped property to be business income and denies the principal residence exemption; defines flipped property to include a right to acquire a housing unit held for fewer than 365 consecutive days; lists nine life-event exceptions; and by subsection 12(14) deems a loss from a business in respect of a flipped property to be nil. Accessed 1 September 2026.
• Explanatory Notes Relating to the Income Tax Act and Other Legislation, April 2023. Department of Finance Canada. Confirms that subsection 12(13) was amended to extend the definition of flipped property to a right to acquire a housing unit, so that profits on an assignment sale are deemed business income where the rights were held for under twelve months, and that the amendment applies to dispositions occurring after 2022. Accessed 1 September 2026.
• Report your real estate income — Canada Revenue Agency. Canada Revenue Agency, page last modified 26 April 2024. States that profit from a property bought with the intention of reselling is fully taxable, expressly includes a property bought before it was built and resold before completion, and confirms the GST/HST treatment applies regardless of motive at purchase. Accessed 1 September 2026.
• Tarion Condominium Addendum, Firm Occupancy Date (PDF). Tarion, form version CONDO FIRM dated 7 October 2020. The addendum Ontario law requires to be attached to every pre-construction condominium purchase agreement. Caps delayed occupancy compensation at $7,500 including $150 a day for living expenses, gives a thirty-day termination right after the Outside Occupancy Date for any reason other than breach by the purchaser, and requires refund with interest within ten days. It does not mention assignment anywhere. Accessed 1 September 2026.
• Coverage and claims before you move in — Tarion. Tarion, read 1 September 2026. Sets deposit protection at up to $20,000 for a condominium unit and, for freehold agreements from 1 January 2018, up to $60,000 where the price is $600,000 or less and ten per cent of the price to a maximum of $100,000 above that. The three triggers are builder bankruptcy, fundamental breach by the builder, and a statutory right to treat the agreement as terminated. Buyer default is not a trigger. Accessed 1 September 2026.
• Ontario’s Residential Condominium Buyers’ Guide (PDF) — Condominium Authority of Ontario. Condominium Authority of Ontario, last updated October 2023. The guide a declarant must deliver under the Condominium Act. States that the ten-day rescission period under section 73 begins on the later of receipt of the executed agreement and receipt of the disclosure documents and the guide. Contains no reference to assignment. Accessed 1 September 2026.
• Pre-construction condos — Condominium Authority of Ontario. Condominium Authority of Ontario, read 1 September 2026. States that the purchase agreement is not binding until the buyer receives both the disclosure statement and the Residential Condominium Buyers’ Guide, and that funds received by a builder must generally be held in trust. Accessed 1 September 2026.
• Pre-construction condos in Ontario: what to know before you buy — HCRA. Home Construction Regulatory Authority, 30 October 2025. States a ten calendar day cancellation right with full deposit refund, that deposits must be held in trust, and that a deposit must be returned in full within ten days where the builder terminates. Does not address assignment. Accessed 1 September 2026.
• Advisory 11, Price Escalations and Contract Terminations — HCRA. Home Construction Regulatory Authority, published 19 August 2022 and updated 5 July 2023. Quotes the Code of Ethics, O. Reg. 245/21, sections 12 and 17(1), and states that cancelling an agreement because a purchaser will not agree to a price increase is not a permitted early termination condition. Accessed 1 September 2026.
• What registrants need to know about shadow-flipping and their disclosure obligations with assignments — RECO. Real Estate Council of Ontario, no publication date shown on the page. Requires registrants to disclose any facts that affect or could affect the value of the property and any negotiations, offers or agreements about a future transaction related to it, and states that in multiple representation a brokerage would have to disclose a buyer’s intention to assign. The article cites REBBA 2002, which has since been replaced by TRESA. Accessed 1 September 2026.
• Condo project cancellations hit record high in Q3 as sales fall to 35-year low — Urbanation. Urbanation, 16 October 2025. Reports ten projects totalling 2,499 units cancelled in Q3 2025 and 4,040 units year to date against a previous record of 3,598 in 2018, and 319 new condominium sales in Q3 2025. States expressly that the cancellation figure does not include all units that were pre-sold but ultimately failed to close. Accessed 1 September 2026.