CostYou've found a great deal on a pre-construction unit listed as an "assignment sale" — but what you're actually purchasing is the original buyer's purchase contract, not the unit itself, and that distinction changes almost everything about the transaction.
Original price vs. assignment price
| Original buyer's contract price with builder | $650,000 |
| Deposits the original buyer already paid | $97,500 |
| Assignment sale price to you | $720,000 |
| Amount you pay the original buyer at assignment | $167,500 (deposits + their profit) |
| Amount still owed to the builder at final closing | $552,500 |
What usually happens
An assignment sale transfers the original buyer's purchase agreement with the builder to you — you step into their shoes as the new buyer under the same original contract terms and price. You pay the original buyer for their deposits already paid plus whatever profit (or loss) they're assigning the contract for, and you remain responsible for the remaining balance owed to the builder at final closing, under the same original contract price and closing date. You're not negotiating a new deal with the builder; you're taking over an existing one.
What to check before you buy an assignment
- Does the builder allow assignments at all? — many purchase agreements restrict or outright prohibit assignment without the builder's consent, sometimes with a fee attached.
- What are the original closing dates and any delay history? — you inherit the original contract's timeline and any project delays already disclosed.
- Who pays HST, and on what amount? — this is one of the most misunderstood and financially significant parts of an assignment; see the myth box below.
- Can you get financing before final closing? — since you don't own anything until the builder closing happens, mortgage pre-approval timing needs careful coordination with your broker.
What you may have been told
Reality: HST and income tax treatment on an assignment depend on the seller's intent when they originally signed, not on whether they ever took possession. The CRA has been actively reviewing assignment transactions, and an assignor who bought with investment intent may owe HST on their assignment profit and income tax on the gain — this isn't automatically tax-free just because no closing occurred.
Who to ask
Have a real estate lawyer experienced specifically in assignments review the original purchase agreement and confirm the builder's consent process before you commit any money. Ask an accountant about the HST and income tax treatment for both the assignor's profit and your own eventual purchase — this is genuinely one of the more complex tax areas in Canadian real estate, and getting it wrong can be expensive for either party.
Once you understand the total cost, including any HST, run your numbers through the closing cost calculator and mortgage payment calculator using the original builder price, not just the assignment premium.