CostYou're assigning (or buying) a pre-construction contract, and whether HST applies to the assignor's profit depends on a fact that isn't written anywhere in the paperwork: why they originally bought.
$70,000 assignment profit, two different intents
| Assignor bought intending to live there, plans changed | Potentially exempt |
| Assignor bought as an investment from the start | HST likely applies to the profit |
| Approximate HST if applicable (13% in Ontario) | ~$9,100 |
What usually happens
HST treatment on an assignment sale's profit hinges on the original buyer's intent at the time they signed the purchase agreement with the builder — not on whether they ever actually closed or lived there. If they bought with a genuine intention to use the unit as a primary residence and their plans later changed, the profit may be treated differently than if they bought specifically as an investment from day one. The CRA has been actively scrutinizing assignment transactions, since intent isn't something that's automatically documented anywhere and is exactly the kind of fact that's easy to misrepresent, deliberately or not.
What to check before you sign either side of this deal
- If you're assigning (selling): get proper tax advice on your own specific situation before assuming any particular treatment, and keep documentation supporting your original intent if you believed you'd live there.
- If you're buying an assignment: confirm in the assignment agreement who is responsible for any HST — this should be explicit, not left ambiguous, since a dispute over who owes it after the fact is a genuinely bad position for either party.
- Don't assume "never closed" means "never taxable" — this is the single most common misunderstanding, and it isn't how the CRA actually evaluates it.
Who to ask
This is a real, case-specific tax question — have an accountant experienced in real estate assignments review the specific circumstances before you sign anything, on either side of the transaction. See our broader assignment sales explainer for the rest of what an assignment purchase involves beyond the tax question.