An assignment sale is how a pre-construction purchase changes hands before the home is finished. The original buyer (the assignor) transfers their rights under the agreement of purchase and sale to a new buyer (the assignee), who then closes with the builder. Assignments can be useful for both sides, but they come with rules, fees and taxes that catch people off guard.
You can browse current assignment listings in our assignments section.
How an assignment works
- Check your agreement. The assignment clause in your purchase agreement says whether assignments are allowed, when, and on what terms.
- Get builder consent. Most builders require written consent and charge an assignment fee. Some prohibit assignments until a certain percentage of the project is sold, or ban public marketing (such as MLS listings) of the unit.
- Agree on price. The assignee typically reimburses the deposits the assignor paid, plus any profit (or less, if the market has dropped).
- Sign the assignment agreement. Both lawyers review it, and the builder approves it.
- The assignee closes. At occupancy and final closing, the assignee pays the balance and takes title under the original agreement terms.
Why people assign
- A change in life plans: a job move, family change, or not wanting to close.
- Difficulty qualifying for a mortgage at closing.
- Investors taking profit before closing (less common now, given the tax rules below).
Buyers like assignments because they can get into a nearly finished home with a shorter wait than buying new at launch, sometimes at a price below the builder’s current price list.
What an assignment costs
- Builder assignment fee: commonly a few thousand dollars or a percentage of the price, plus the builder’s legal fees.
- Realtor commission: if you list with an agent, often calculated on the full purchase price or the assignment price as agreed.
- Legal fees on both sides.
- Taxes on any profit, explained below.
HST on assignments
Since 2023, assignment sales of newly built residential homes are subject to GST/HST on the assignment payment (the amount paid above the deposit being reimbursed). This applies whether or not the original buyer intended to live in the home. The assignee will also want to know how HST rebates on the original purchase are handled, since some rebates require the buyer to occupy the home. Read our GST/HST rebate guide for background, and have your lawyer confirm the treatment for your deal.
Income tax and the anti-flipping rule
Since January 1, 2023, the federal residential property flipping rule treats profit on a property (including an assignment of a purchase agreement) held for less than 365 days as business income. That means it’s fully taxable and not eligible for the principal residence exemption, unless a listed life event applies, such as a death, a new job, separation or disability. Even outside that rule, the CRA often treats assignment profits as business income. Get tax advice before you assign.
Tips for assignors (sellers)
- Read the assignment clause before you buy, not when you need to sell. A free or low-cost assignment clause is a valuable negotiating point; see how to negotiate pre-construction prices.
- Price against the builder’s current price list and recent resales in nearby completed buildings.
- Factor in timing. An assignment close to occupancy attracts buyers who want a quick move-in.
Tips for assignees (buyers)
- Ask for the full original agreement, all amendments, the deposit receipts and the builder’s consent conditions.
- Confirm what’s included: parking, locker, upgrades, and any capped closing costs.
- Understand that you’ll pay the full original price at closing plus the assignment payment to the seller, and arrange financing on that basis. Our mortgage pre-approval guide explains lender requirements.
- Know the two key dates: interim occupancy and final closing. See occupancy vs final closing.
Assignments vs other exit options
If you can’t close, an assignment is usually better than walking away, which can mean losing your deposits and being sued for damages. Other options include closing and renting the unit, or closing and selling it as a resale later. Our pre-construction investor guide covers holding strategies.
Frequently asked questions
Can every pre-construction home be assigned?
No. It depends on the agreement. Some builders prohibit assignments entirely, others allow them with consent and a fee.
Can I list my assignment on MLS?
Many agreements restrict public advertising before the builder has sold out. Check the clause and ask the builder before listing.
Who pays the land transfer tax?
The assignee pays land transfer tax at final closing, generally based on the total consideration, which can include the assignment payment. Confirm with your lawyer.
General information only, not legal or tax advice. Assignment rules depend on your agreement and current tax law, so consult a real estate lawyer and a tax professional.
