Land Transfer Tax on Assignment Sales in Ontario: What Condo Buyers and Sellers Need to Know

You found a pre-construction condo deal — not from a builder, but from someone who signed a purchase agreement years ago and now wants out before the building closes. This is called an assignment sale, and it comes with a closing cost that catches many buyers off guard: land transfer tax on the full builder price, not just the amount you paid the original buyer.

Understanding land transfer tax on an assignment sale in Ontario before you sign can save you thousands of dollars in unpleasant surprises at closing. This article explains how LTT works in an assignment, what the "value of consideration" actually means, and where to watch out for extra costs.

What Is an Assignment Sale?

When a buyer (the assignor) signs a pre-construction purchase agreement with a builder, they acquire the right to buy that unit when it is ready. An assignment sale happens when the assignor transfers those contractual rights to a new buyer (the assignee) before the building reaches final closing.

The assignee steps into the assignor's shoes. They take over the original purchase agreement with the builder and will be the one who eventually takes title to the unit. The builder typically must consent to any assignment, and the original agreement almost always governs what that process looks like.

From a legal perspective, the assignee is not buying a finished home — they are buying a contract. But at final closing, they receive title, and that is when land transfer tax becomes due.

Two Closing Events — And When LTT Is Actually Paid

Pre-construction condos typically involve two distinct closing events, and knowing which one triggers LTT matters.

Interim occupancy closing: This happens when the unit is substantially complete and the builder lets you move in, but the building has not yet been registered as a condominium corporation. You pay the builder occupancy fees (similar to rent). You do not own the unit yet, and you do not pay LTT at this stage.

Final closing: This is when the condominium corporation is registered, title actually transfers to you, and you become the legal owner. Land transfer tax is paid at final closing. This can happen weeks, months, or occasionally more than a year after you moved in under interim occupancy.

For assignees, this timeline matters for budgeting. You may have paid the assignor's premium months before you ever pay LTT to the government.

How LTT Is Calculated on an Assignment Sale

This is where many assignees are caught off guard. Land transfer tax in Ontario is calculated on the "value of the consideration" — essentially the total price you are paying for the property. In a standard resale transaction, that is the purchase price on the agreement of purchase and sale.

In an assignment, the assignee pays two amounts:

1. The deposit and balance owed to the builder under the original purchase agreement
2. The assignment premium paid directly to the assignor (the profit above the original purchase price)

Both amounts together form the value of the consideration for LTT purposes. If the builder price was $700,000 and you paid the assignor an additional $100,000 to acquire their rights, your LTT is calculated on $800,000 — not just the $700,000 or just the $100,000.

As of writing, Ontario's LTT rates are graduated (starting at 0.5% on the first portion of value and rising with higher-value properties). The exact thresholds and rates can change, and you should verify the current figures at ServiceOntario before closing. For a transaction in the $700,000–$900,000 range, LTT typically runs in the range of several thousand to over ten thousand dollars — significant enough that skipping the calculation is a costly mistake.

The First-Time Home Buyer Rebate — Does It Apply?

Ontario offers a land transfer tax rebate for first-time home buyers, up to a maximum amount (verify the current cap at ServiceOntario, as it can be adjusted). The rebate is available on qualifying homes, and assignees may be eligible if they meet all of the standard conditions — primarily that neither they nor their spouse has ever owned a home anywhere in the world, and that the unit will be their principal residence.

Being an assignee rather than an original purchaser does not automatically disqualify you from the rebate. However, the specifics of your situation — including how the assignment agreement is structured and what the builder's consent terms say — can affect eligibility in ways that vary case by case. Verify your eligibility with a lawyer before closing.

Toronto's Municipal Land Transfer Tax

If the condo is located within the City of Toronto, a second municipal land transfer tax applies on top of the provincial one. Toronto's MLTT is calculated on the same value of consideration, using a similar graduated rate structure. Assignees buying a Toronto pre-construction unit should budget for both taxes, which together can represent a significant five-figure cost on a mid-range unit. Confirm current Toronto MLTT rates with the City of Toronto or your lawyer before closing.

Why Assignment Closings Are More Complicated

Assignment sales involve more moving parts than a straightforward resale purchase. Documents your lawyer will need to review and work with typically include:

• The original builder purchase agreement (often lengthy and full of builder-friendly terms)
• The assignment agreement between assignor and assignee
• The builder's consent letter or confirmation of approval
• Any amendments or side letters to the original agreement
• Disclosure documents required under the Condominium Act and New Home Construction Licensing Act

Because you are closing a contract with a builder — not with an individual seller — the process follows the builder's schedule and conditions, not a negotiated closing date. Delays in registration are common with new condos, and the assignee has little control over timing.

A lawyer experienced in assignment closings will flag risks in the original purchase agreement before you are locked in.

HST on the Assignment Profit — A Separate Issue Worth Flagging

LTT is not the only tax concern on an assignment sale. The Canada Revenue Agency (CRA) takes the position that the profit an assignor earns on an assignment may be subject to HST (Harmonized Sales Tax), in addition to income tax.

This is separate from LTT and is a matter of federal tax law, not provincial. How it affects you — whether you are the assignor or the assignee — depends on your specific circumstances, including how CRA classifies the original purchase and whether HST is embedded in the assignment price. Speak with an accountant or tax advisor before you sign the assignment agreement, not after. Getting this wrong can result in unexpected tax bills on both sides of the transaction.

The Most Common Mistake Assignees Make

The single most common budgeting error in assignment closings is assuming that LTT is calculated only on the assignment premium paid to the assignor, rather than on the full consideration paid to acquire the unit.

If you paid $80,000 to the assignor and will pay the builder $620,000 at closing, your LTT is calculated on $700,000 — the full combined amount. Failing to budget for this gap can leave buyers short of funds at final closing.

Your real estate lawyer should walk you through a closing cost statement well before the closing date so there are no surprises on closing day.

Frequently asked questions