The HST Trap in Assignment Sales (2026)
Since May 2022, assignment sales of new homes are taxable: the assignor charges HST on the profit, and the builder’s price assumes rebates you may not get.
Two different HST issues, often confused. First, since 7 May 2022, every assignment of a new-home contract is a taxable supply: the assignor must charge HST (13% in Ontario) on the profit portion ($9,100 on a $70,000 assignment profit), and the assignee pays it. Second, at final closing the builder's price usually includes HST "net of rebates" on the assumption the buyer will live in the unit. If the assignee is an investor, or the builder cannot confirm the assignee's eligibility, the rebates are charged back at closing: up to $24,000 Ontario plus up to $6,300 federal on a $650,000 unit, cash on closing day, sometimes recoverable later, sometimes not.
Figures come from the CostToClose guided buying flow.
Trap 1: HST on the assignment itself
Before May 2022, HST on an assignment depended on whether the assignor was a "builder" for tax purposes, a facts-and-intent test that produced endless disputes. Since then the rule is simple: all assignments of agreements for new housing are taxable. HST applies to the assignment consideration excluding the deposit reimbursement; that is, on the profit.
| Item | Amount |
|---|---|
| Assignment price | $720,000 |
| Original contract | $650,000 |
| Deposits reimbursed (not taxable) | $97,500 |
| Profit (taxable) | $70,000 |
| HST at 13% | $9,100 |
The assignor must be registered or register for HST to remit it; the assignee generally cannot recover it unless they are themselves registered and the unit is a commercial rental, which is the exception.
Trap 2: the new-housing rebates at final closing
The builder's price is typically "inclusive of HST, net of rebates assigned to the builder." That means the builder has already reduced the price by the federal and Ontario new-housing rebates, on the assumption the buyer qualifies, chiefly by occupying the unit as a primary residence (or a close relative doing so).
If the assignee will rent the unit out, they do not qualify for the new-housing rebate. The builder charges the rebate amounts back on the statement of adjustments. The investor can then apply to CRA for the new residential rental property rebate, which is similar in amount but paid months later after filing with a one-year lease. Cash on closing rises by the rebate amount in the meantime.
| $650,000 unit, Ontario | Occupant assignee | Investor assignee |
|---|---|---|
| Ontario new-housing rebate (75% of 8% provincial portion, max $24,000) | Built into price | Charged back: $24,000 |
| Federal new-housing rebate (phases out over $450,000) | Built into price | Charged back: $0 at this price |
| First-time buyer GST rebate (if eligible) | Up to $32,500 back | Not available |
| Extra cash at closing | $0 | $24,000, then apply for the rental rebate |
Computed with the CostToClose calculator, 14 September 2026.
What to confirm before signing
- Whether the assignment price includes or excludes HST on the profit. Assignment agreements are drafted both ways; a $9,100 misunderstanding is common.
- Your intended use, and that the builder's closing documents will reflect it.
- Whether the builder requires the assignee to sign a new rebate assignment. Most do; if the assignor already signed one, the builder may need it re-executed.
- First-time buyer GST rebate: if you qualify, it replaces the federal new-housing rebate and can be worth far more; the builder's paperwork must be for you, not the assignor.
- Land transfer tax base. Separate from HST; ask your lawyer.
Frequently asked questions
Is HST charged on an assignment sale?
Yes, since May 2022, on the profit portion of every assignment of a new-home contract. The deposit reimbursement is not taxed.
Do I lose the HST rebate if I buy an assignment?
Not if you will occupy the unit as a primary residence and the builder's documents reflect that. Investors are charged the rebate back at closing and must apply separately for the rental rebate.
How much is the Ontario new-housing rebate?
75% of the 8% provincial portion of HST, to a maximum of $24,000 — reached at a $400,000 price. It does not phase out.
Can I recover the HST I paid on the assignor's profit?
Generally no, unless you are HST-registered and using the unit commercially.
Does the first-time buyer GST rebate apply to an assignment?
It can, if the assignee is a first-time buyer, will occupy the unit, and the agreement chain qualifies. Confirm with the builder and your lawyer, since the rebate is claimed through the builder at closing.
Sources
- Canada Revenue Agency, GST/HST on assignment sales of new housing — effective 7 May 2022 — checked 14 Sept 2026
- Canada Revenue Agency, GST/HST New Housing Rebate and New Residential Rental Property Rebate — checked 14 Sept 2026
- Ontario Ministry of Finance, HST new housing rebate — checked 14 Sept 2026
- Department of Finance Canada, First-Time Home Buyers' GST Rebate — checked 14 Sept 2026
This is general information for Canadian home buyers and sellers, checked against the sources listed above on the date shown. It does not constitute legal, tax, or mortgage advice. Because rules and rates change, confirm current figures with your lawyer or notary, your lender, or the government office that administers the tax before you rely on them.