Assignors used to argue about whether their assignment was taxable. Since 7 May 2022 there is nothing to argue about — every assignment of newly built residential housing is a taxable supply.
“My closing costs were itemized clearly, so I could see what I was actually paying for.”O.P. · Home purchase · London
Shared with permission. Initials changed to protect client privacy.
Enter your original purchase price and the price the assignee is paying you. Flag whether the agreement separates out your deposit reimbursement.
Assignments often carry interim occupancy too. See the interim occupancy fee calculator → if the unit hasn't registered yet.
Intention no longer matters — only the numbers do.
HST applies to the assignment amount — in practice, your profit. Intention no longer matters: it is taxable whether you bought to flip or bought to live in it and had your circumstances change.
The deposit reimbursement is the part people get wrong. If your assignment agreement separately identifies the amount that reimburses your deposit, that portion is excluded. If it does not, the CRA can treat the whole consideration as taxable — which is the difference the switch in the calculator above shows, and it is usually five figures.
The assignor's problem, and a separate income-tax question.
The assignor is normally the one required to collect and remit the HST, and may need to register for a GST/HST number to do it. Assignees regularly discover at closing that the tax was never collected and the builder is looking to them.
Separately, the CRA generally treats assignment profit as business income rather than a capital gain, so the whole profit is taxable rather than a portion of it. Two different taxes, two different problems, and the agreement wording drives both — see HST on Condo Assignment Sales → for the full picture.
Say your original agreement was $700,000 and your assignee is paying $820,000. Here is the same deal with the deposit reimbursement worded two different ways:
Agreement separates out the deposit reimbursement:
Agreement does NOT separate it out:
One clause is the difference between keeping $104,400 and keeping $13,400 of the same deal. Run your own numbers in the calculator above.
Yes. Since 7 May 2022 every assignment of newly constructed or substantially renovated residential housing is a taxable supply, regardless of the assignor's original intention.
Only if the assignment agreement fails to separate it out. Where the agreement expressly identifies the portion that reimburses the deposit, that portion is excluded from the taxable consideration. Where it does not, the entire amount can be taxed.
Normally the assignor, who may have to register for a GST/HST account in order to do so.
Usually not. The CRA generally treats assignment profit as business income, which means the full amount is taxable rather than only a portion of it.
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