HST on Condo Assignment Sales in Ontario: What Assignors and Assignees Must Know

Selling your spot in a pre-construction condo deal — what's called an assignment sale — can feel like a clean exit strategy. The new buyer pays you for taking over your agreement, and you walk away before the building even registers. But since May 7, 2022, the Excise Tax Act treats that assignment as a taxable supply, and the question of who collects the HST on the assignment fee in a condo assignment sale Ontario transaction catches many people off guard. Getting this wrong can mean unexpected tax bills, penalties, and interest long after the deal closes.

This article walks through the core HST rules, how the rules worked before and after May 7, 2022, who is responsible for remitting tax, and what to include in your assignment agreement.

Assignment sales like this fall under our real estate law services — flat-fee purchases, sales, and mortgages across Ontario.

Why Assignments Create a Separate HST Question

When you buy a pre-construction condo, the builder charges HST on the purchase price — that part is straightforward. An assignment sale, however, creates a second layer. You are not selling the condo itself; you are selling your rights under the Agreement of Purchase and Sale. That is a different transaction, and the Excise Tax Act treats it differently.

Since May 7, 2022, the HST question on an assignment no longer turns on why you originally entered the purchase contract: the Excise Tax Act treats an assignment by anyone other than the builder as a taxable supply. The same type of deal now gets the same HST result, whatever your original intent.

How HST Applies to an Assignment Today

Suppose you signed a pre-construction contract and now want to assign it to a new buyer. Whether you always meant to resell or planned to move in, the same rule applies to an assignment made on or after May 7, 2022.

The assignment is taxable, and HST applies to the full price the new buyer pays you for it, less only any part the assignment agreement shows in writing as reimbursing your deposit. Amounts paid for upgrades are not taken out. Even if you entered the contract for personal use, an assignment made on or after May 7, 2022 is a taxable supply, so HST applies to the assignment fee. Your original intent no longer decides whether HST applies to the assignment.

As of writing — verify with CRA — the combined federal and Ontario HST rate is 13%. If HST applies to your assignment fee and you are not registered for HST, you may still have to collect and remit it. The obligation to collect it is generally yours as the assignor, not the builder's.

Even in this case, the new buyer can still claim the new housing rebate on the condo if they qualify, but the price they pay you for the assignment counts toward the total price used for the rebate.

How the Earlier Rules Worked (Before May 7, 2022)

Before May 7, 2022, whether HST applied to an assignment depended on why you originally entered the purchase contract. If you signed with no plan to live in or rent the unit and meant to assign at a profit, CRA's position was that you were engaged in an adventure in the nature of trade, and the assignment was taxable. If you signed genuinely intending to occupy the unit and life changed — a job relocation, a growing family, a financial hardship — the assignment fee could be said not to be subject to HST. That position ended on May 7, 2022, when all assignment sales of newly constructed residential housing became taxable.

For assignments made before May 7, 2022, courts and CRA looked at the full picture: what you told the builder at signing, whether you arranged financing as an end-user, whether you applied for the new housing rebate, what your other real estate activity looks like, and any documents that show your plans at the time.

Under those rules the outcome was not guaranteed. CRA could challenge the personal-use claim if your conduct was inconsistent, for example if you signed a power of attorney in favour of someone else at closing, or if you had multiple pre-construction contracts at the same time.

The same type of deal now gets the same HST result, whatever your original intent.

Who Collects and Remits HST on the Assignment?

This is where many deals go sideways. The assignor makes the assignment, and the person who makes a taxable supply is the one who must collect the tax, so the assignment agreement must be clear about how HST is handled.

If the builder is party to the assignment (as many are required to be by the original Agreement of Purchase and Sale), the builder generally charges HST on any fee it charges for its consent, but the HST on the assignment itself is the assignor's to collect. Builders also often disclaim responsibility for the assignor's HST, leaving that obligation with the assignor.

If HST applies and the assignor is not registered for HST, they may still have to collect and remit it. This creates a situation where both parties assume the other handled it — and neither did.

The safest approach: address HST explicitly in the assignment agreement, confirm registration status, and obtain written confirmation from the builder about their role in the transaction.

What the Assignee (New Buyer) Needs to Know

If you are stepping into someone else's pre-construction contract, HST applies to the price you pay the assignor for the assignment as well as to the new condo itself, and you should understand who is responsible for collecting it.

More practically: your right to the new housing HST rebate on the condo depends on your own intent and the rebate's other conditions. You must be acquiring the unit for use as your primary place of residence (or that of a qualifying relative) to claim the rebate, and the federal rebate has a price limit that counts what you paid the assignor. The rebate is typically credited by the builder at closing, as of writing — verify current thresholds and amounts with CRA or an accountant.

Confirm with your lawyer that the assignment agreement properly reflects what is included in the price and how HST is allocated.

CRA Scrutiny: Getting the HST Right

Because an assignment of an agreement for a new condo is now a taxable supply, the HST should be collected and remitted whether it is your first assignment or your fifth. Before May 7, 2022, CRA applied what it calls "badges of trade" — factors that suggest commercial rather than personal intent, such as multiple assignments, short holding periods, use of numbered companies, and inconsistency between stated intent and actual conduct.

Voluntary compliance — registering for HST where required, reporting the income, and collecting and remitting correctly — is far less costly than a reassessment with penalties and interest. As of writing — verify current penalty rates with CRA.

Checklist: What Your Assignment Agreement Should Address

Before you sign, confirm that the assignment agreement covers the following:

• HST on the assignment fee — state clearly whether the price is inclusive or exclusive of HST and which party remits
• Builder consent — many original agreements require the builder's written consent to assign; obtain and attach it
• Deposit transfer — specify which deposits transfer and any adjustment for interest earned
• Upgrade credits and extras — clarify what the assignee inherits and what, if anything, was negotiated directly with the builder
• New housing rebate assignment — if the assignee will occupy the unit, confirm whether the rebate will be assigned to the builder at closing and on what terms
• Conditions and timelines — occupancy date, registration date, and any builder extension rights that carry forward
• Representations about the original contract — the assignor should warrant that the original agreement is in good standing and disclose any builder notices received
• Indemnity for pre-closing costs — maintenance fees, occupancy fees, and development charge adjustments that arise before title transfers

Frequently asked questions