Is land transfer tax payable on an assignment of a purchase agreement in Ontario?
An assignment of a purchase agreement transfers the buyer's contractual rights under that agreement — not the land itself — to a new purchaser. Because no deed is registered, a pure assignment is generally not subject to Ontario land transfer tax at the time of the assignment.
Land transfer tax becomes payable when the ultimate assignee (the person who acquires the right to purchase) takes title and the deed is registered at closing. At that point, LTT is calculated on the total value of the consideration paid for the land, which typically includes the original purchase price to the builder plus the assignment fee paid to the original buyer.
The Ministry of Finance has taken the position that assignment fees paid as part of the consideration for the property should be included in the LTT base. This means buying an assignment at a premium above the original purchase price will likely result in a higher LTT bill at final closing. Get a lawyer involved early so the LTT exposure is understood before you commit.
Key takeaways
- Assignment of the agreement itself generally does not trigger LTT — but deed registration does.
- LTT at final closing is calculated on the full consideration, including the assignment fee.
- A premium paid in an assignment deal increases the eventual LTT obligation.
- Have a lawyer review the assignment before committing to understand all costs.