Assignments: selling a pre-construction home before it closes
Assignment is an exit, not a strategy. Understand the restrictions before you rely on it.
Updated
An assignment transfers your rights under the agreement of purchase and sale to another buyer before the home closes. It transfers contractual rights rather than completed title; construction may already be underway or complete.
What usually restricts it
- Builder consent, which is typically discretionary
- An assignment fee, which can be substantial
- A prohibition on marketing the assignment publicly
- A window during which assignment is not permitted at all
- A requirement that the original buyer remains liable if the assignee defaults
The tax question
Income-tax treatment depends on facts and current rules. CRA generally treats assignments of newly constructed or substantially renovated residential property as taxable for GST/HST; ask an accountant about taxable consideration, deposits and any exceptions. This is a matter for an accountant before you commit, not after you have a buyer.
Never buy pre-construction on the assumption that you can assign. Buy on the assumption that you will close, and treat assignment as a contingency.
If you do assign
Expect a smaller buyer pool, expect financing for your assignee to be harder, and expect the builder's paperwork to take longer than you planned.
Treat assignment as a conditional exit
Do not budget around an unapproved assignment. Confirm builder consent, buyer funds, fees and liability before marketing the contract.
GST/HST and income-tax treatment depend on the transaction. A professional must review the actual agreement and current CRA rules.
| Decision check | Evidence to collect |
|---|---|
| Does the agreement permit assignment and require consent? | Record the answer, document reference and follow-up owner before committing. |
| What fees, marketing restrictions and continuing liability apply? | Record the answer, document reference and follow-up owner before committing. |
| What tax and funding obligations survive the assignment? | Record the answer, document reference and follow-up owner before committing. |
Your next step for Valley Brooke Towns
Use the published home format and size range to decide whether to request more detail. Tenure, model-specific pricing, deposits, floor plan drawings and contractual dates remain unknown. A review request does not reserve a home, and a booked VIP review time does not either.
- Keep a dated document checklist for the subject covered in this guide.
- Ask a qualified professional to review transaction-specific legal, tax or financing questions before signing.
Common questions
Does the agreement permit assignment and require consent?
Read assignment provisions and obtain any required written builder consent before marketing or committing to an assignment. Permission cannot be assumed.
What fees, marketing restrictions and continuing liability apply?
Check fees, marketing restrictions, consent conditions and whether the original purchaser remains liable. Obtain a written legal explanation.
What tax and funding obligations survive the assignment?
An assignment can create GST/HST and income-tax issues as well as continuing contractual liability. Have legal and tax professionals review the actual transaction.
Sources and further reading
- Tiffany Park Homes — Valley Brooke Towns
- CRA — GST/HST new housing rebate
- CRA — first-time home buyers GST/HST rebate
- Ontario — calculating land transfer tax
- Ontario — first-time homebuyer land transfer tax refund