Can You Get the HST Rebate on an Assignment Sale? Ontario Rules Explained

Assignment sales have complex HST rules. Since May 2022, all assignments are taxable. We explain who pays, who qualifies, and how the CRA treats these deals.

# Can You Get the HST Rebate on an Assignment Sale? Ontario Rules Explained Assignment sales of pre-construction condos have complex HST rules that every buyer needs to understand. ## What Is an Assignment Sale? An assignment sale occurs when the original buyer sells their purchase agreement to a new buyer **before the property is completed and title transfers**. You're buying someone else's contract. ## The 2022 Rule Change **Since May 7, 2022**, all assignment sales of new residential housing are **taxable for GST/HST purposes** — regardless of whether the seller is a builder or individual. ## Two Layers of HST ### Layer 1: HST on the Assignment Fee The profit portion is subject to 13% HST. | Item | Amount | | --- | --- | | Original purchase price | $500,000 | | Assignment price | $550,000 | | Assignment fee | $50,000 | | HST on assignment fee | **$6,500** | ### Layer 2: HST on the Final Purchase When the building completes, HST applies to the full purchase price — but rebates may be available. ## Who Qualifies for HST Rebates on Assignments? ### New Housing Rebate (on the final purchase) - The **assignee** (buyer) must be purchasing as their **primary residence** - Standard rebate rules apply based on purchase price - The assignee applies for the rebate, not the assignor ### Rebate on the Assignment Fee HST - Generally **no rebate available** on the assignment fee portion - The $6,500 in the example above is a sunk cost ## Key Risks for Assignment Buyers 1. **Builder consent required** — most builders charge $5,000–$10,000 for assignment approval 2. **HST surprises** — if the original buyer's rebate was assigned to the builder, the assignee may need to re-qualify 3. **CRA scrutiny** — assignments are heavily audited for unreported income 4. **Financing challenges** — some lenders won't finance assignments ## Key Takeaway Assignment sales can be profitable but carry significant HST complexity. Always work with a real estate lawyer experienced in assignments and get a clear breakdown of all tax obligations **before** signing.

Published by Circle Real Estate Brokerage — Toronto & GTA pre-construction and resale experts.