Assigning a Pre-Construction Contract: GST/HST Rebate in Canada

Pre-construction condos and homes are sometimes resold before closing by assigning the purchase agreement to a new buyer. If you are the assignee, you want to know whether you can still claim the GST/HST rebate. If you are the assignor, you want to know how tax applies to what you receive.

This article explains in general terms how the federal rebate works with assignments, who claims it and where the traps are. Dates and agreement details matter a great deal, so a lawyer or accountant should review your documents.

This article covers Canadian federal tax law, which applies in every province.

How an assignment changes the tax picture

Where an agreement for a new house is assigned to you, there may be two builders in the picture. You may pay GST/HST to the original builder and also to the assignor for the interest transferred. Assignment fees count toward the price threshold only if they are taxable.

The tax you paid on an assignment is also counted when you complete the rebate form, because line 1 of the GST190 worksheet for a builder purchase is the GST or federal HST paid on the house, including tax paid on an assignment.

Who can claim the new housing rebate as an assignee

The usual conditions still apply to the assignee. A builder sells a new single unit residential complex or condo unit to an individual who acquires it as their own or a relation's primary place of residence, with total consideration under $450,000, all applicable tax paid, and ownership transferring after substantial completion. The first occupant must be the buyer or a relation, or the buyer must make an exempt sale before anyone occupies it.

• The amount is the lesser of $6,300 and 36% of the GST or federal part of HST paid when consideration is $350,000 or less.
• Between $350,000 and $450,000 the rebate phases out, and at $450,000 or more it is nil.
• Only individuals can claim, and only one individual even if several own the house.
• The rebate is a percentage of tax paid, not of price.

If you are buying for a relation to live in, that can still work if all other conditions are met. Whether a particular assignment structure fits these conditions depends on the documents.

First-time buyers and the cut-off date

The first-time home buyer rebate is up to the lesser of $50,000 and the tax paid on homes of $1,000,000 or less, less any base rebate, and it phases out to nil at $1,500,000. The agreement must be entered into after March 19, 2025 and before 2031.

Assignments are a special case. A first-time buyer who takes over another person's builder agreement signed before the cut-off date cannot claim the first-time buyer rebate, and cancelling and replacing an earlier agreement may disallow it. The statute and CRA show a start date in March 2025, while the Finance backgrounder refers to May 27, 2025, so check the date of the original agreement with a lawyer or accountant.

A buyer who fails the first-time test may still qualify for the regular rebate.

Claiming, deadlines and where to send it

Only the builder who sells the house can pay or credit the rebate. An assignor who sold you the purchase agreement cannot, so an assignee must claim directly from CRA on Form GST190. For a builder purchase, the deadline is two years after ownership transfers. CRA considers late requests only for owner-built homes in extraordinary circumstances, so a missed deadline on a builder purchase generally means the rebate is lost.

Send the form and a copy of the statement of adjustments, with Form RC7190-ON if claiming an Ontario rebate. Keep the worksheet and records for six years. If you receive a rebate you were not entitled to, you must repay it.

What to do next

• Get the original agreement, the assignment and the statement of adjustments.
• Note the date of the original agreement and when the assignment was signed.
• Confirm what GST/HST was charged on the assignment fee, and by whom.
• Confirm who will occupy the home first and whether you meet the rebate conditions.
• Calendar the two-year deadline from the date ownership transfers.
• Have a lawyer or accountant review the paperwork before you sign or close.

Frequently asked questions