What Is an Assignment Sale?

Written by Firas Swaida, RE/MAX Realty Services Inc., Brokerage. Updated July 2026.

Assignment Sales Explained: What They Are and How They Work

An assignment sale is the sale of a contract, not the sale of a finished home. When a buyer purchases a pre-construction condo or house from a builder, they sign an agreement of purchase and sale. That agreement gives them the right to complete the purchase once the property is built and registered. In an assignment sale, the original buyer sells their rights and obligations under that agreement to a new buyer before the deal closes. The original buyer is the assignor. The new buyer is the assignee. No deed and no keys change hands, because the building may not be finished and title may not exist yet. What is sold is the position in the builder’s contract, together with the deposits already paid and any premium the two sides agree on.

Here is how it works in plain terms. Someone bought a pre-construction unit a few years ago, paid deposits along the way, and now wants out before final closing. A new buyer steps into their place. The assignee agrees to honour the builder’s contract, pays the assignor back for the deposits, and usually pays a premium if the unit is worth more now than the original price. In almost every case the builder has to approve the transfer, because the original agreement contains an assignment clause. Once the builder consents and the lawyers complete the paperwork, the assignee is the party who will close directly with the builder when the building registers.

This guide is a plain-language reference. It explains the terms, the steps, the money, the paperwork, and the tax picture at a high level, and it flags where you must get advice from your own accountant and real estate lawyer. Assignment sales carry real tax consequences and real legal risk. Read this as an explainer, then get professional advice before you sign anything.

The plain definition of an assignment sale

An assignment sale is a transaction in which a purchaser who has signed an agreement of purchase and sale with a builder sells (assigns) their rights and obligations under that agreement to another person. That is how the Canada Revenue Agency describes it, and it is the heart of the whole idea. The thing being sold is the contract itself, sometimes called the paper, not a completed property with a registered title. Lawyers and the tax authorities describe it as selling your interest in the new home, meaning the legal right you gained by signing the builder’s agreement.

Two separate contracts are involved, and keeping them straight prevents most of the confusion:

The original agreement: the agreement of purchase and sale between the builder and the first buyer. It sets the price, the deposit schedule, the closing terms, the occupancy rules, and the conditions under which the contract can be assigned.
The assignment agreement: a second contract, between the first buyer (the assignor) and the new buyer (the assignee). It transfers the first buyer’s rights and obligations to the new buyer. It does not cancel the original agreement. It sits on top of it.

Because the assignment agreement does not erase the builder’s contract, the assignee has to honour everything in that original deal: the balance owing, the closing date, the occupancy terms, and any rules the builder set out. The assignee is buying a place in line and a price that was locked in earlier, and they take on the obligations that came attached to it.

New construction is the usual setting

Assignment sales almost always involve newly built or substantially renovated residential housing, most often a pre-construction condominium unit, but also freehold houses and towns bought from a builder. The reason is timing. Pre-construction deals can run for years between the first deposit and final closing. Over those years a buyer’s plans can change, or a unit’s value can climb, and the assignment is a way to move on before closing. A resale of a finished, registered home is a different transaction and is not an assignment.

Assignor and assignee: who is who

The two roles have specific names, and they carry different money, different risks, and different responsibilities.

Assignor: the original buyer who signed with the builder and now wants to sell the contract before closing. The assignor has paid the deposits so far and generally wants to recover them and earn a premium on top.
Assignee: the new buyer who takes over the contract. The assignee reimburses the assignor’s deposits, pays the agreed premium, and becomes responsible for completing the purchase with the builder later.

A simple way to remember the direction: the assignor assigns the contract away, and the assignee is the person it goes to. Once the deal is done, the assignee deals with the builder directly. By the time the building registers and final closing arrives, the assignor has usually been paid out and has stepped away.

Why people assign

People assign contracts for many reasons, and not all of them are about profit. The motive tends to shape how a deal is priced.

Common reasons an assignor wants out

Life changed: a job move, a growing family, a separation, a health issue, or a shift in finances can make the original unit no longer fit. A pre-construction wait leaves a lot of room for plans to change.
The unit is worth more: if values rose since the original signing, the assignor may want to realize that gain now rather than close, take on a mortgage, and sell later as a resale.
Closing is hard to fund: some buyers cannot qualify for the mortgage they need at final closing, or do not want to fund the balance and the closing costs. Assigning is a way out before that bill comes due.
Investor strategy: some buyers purchase pre-construction with the plan of assigning before closing, aiming to earn on the deposit rather than hold the unit long term. The tax treatment of that plan is a serious matter, covered later in this guide.

Common reasons an assignee wants in

Access to a sold-out building: once a project sells out at the builder level, buying an assignment from an existing purchaser is often the only way to get a unit in that building.
A shorter wait: assignments frequently come up later in the construction timeline, so the assignee may move in sooner than someone buying pre-construction from scratch.
A price set earlier: the original contract price was locked in at an earlier date. Even after a premium, the all-in cost can look reasonable next to a finished resale unit in the same area.
Choice of unit: the assignee may find a floor plan, a view, or a layout that is no longer available from the builder.

None of these reasons removes the need for careful checking. A good reason to do a deal is not the same as a good deal.

The role of the builder and consent

The builder sits at the centre of almost every assignment, though it is not buying or selling anything in the assignment itself. The original agreement of purchase and sale nearly always contains an assignment clause, and that clause usually says the buyer cannot assign the contract without the builder’s written consent.

Why consent matters so much

If a buyer tries to assign without the builder’s consent where consent is required, they risk breaching the original agreement. A breach can let the builder cancel the deal, and the deposits and any premium can be put at risk. This is why the first step in any assignment is reading the original contract to see exactly what it permits. The consent step is not a formality to rush past.

Builders take different positions. Some allow assignments on reasonable terms. Others restrict them heavily, limit how they can be advertised, or forbid public listing on the MLS system. Some do not permit assignments until a certain share of the building has sold. The rules live in the contract and in the builder’s own assignment policy, so check both before you list or offer.

The builder’s assignment fee and conditions

Where a builder allows an assignment, it commonly charges an assignment fee, and that fee can be significant. The builder may also set conditions the assignor has to meet first, such as:

Paying the assignment fee and any administrative or legal charges the builder requires.
Having a certain percentage of the deposit paid before an assignment is allowed.
Restrictions on marketing, including a ban on listing the unit publicly or on the MLS.
The builder’s approval of the assignee, sometimes including proof that the new buyer can qualify to close.
A term that keeps the original buyer responsible to the builder until final closing, even after the assignment.

The CRA notes that a builder’s assignment fee is generally subject to GST/HST, so build it into the numbers early rather than discovering it late.

Deposits and the premium

Money in an assignment breaks into two main pieces: the deposits the assignor has already paid to the builder, and the premium the assignor is charging on top. Getting these straight is essential, because they are treated differently, including for tax.

The deposits

In a pre-construction purchase, the buyer pays deposits to the builder over time, often reaching a set percentage of the purchase price by a certain date. When that buyer assigns the contract, they typically want those deposits back from the assignee. So the assignee usually reimburses the assignor for every dollar of deposit already paid, which can be a substantial sum.

The premium, which is the assignor’s markup

The premium is the amount the assignor charges above what they have already put in, meant to capture the rise in the unit’s value since the original signing. If the unit is worth more now, the premium is how the assignor realizes that increase without closing. In a flat or falling market it can be small, zero, or even negative, meaning the assignor accepts less than they paid in just to get out. The premium is negotiated, and it is where most of the tax attention lands.

How the money usually flows

The assignee reimburses the assignor for the deposits already paid to the builder.
The assignee pays the assignor the agreed premium, often with part of it held back until final closing.
The assignee later pays the balance of the purchase price to the builder at final closing, plus the usual closing costs.
The builder is paid its assignment fee, usually by the assignor, though who bears each cost is negotiated and set out in the paperwork.

Because the assignee has to fund the deposits and the premium up front, well before they can get a mortgage on the finished unit, assignments demand more cash earlier than a normal resale.

The paperwork and the lawyer’s role

An assignment involves more documents than a standard resale, and the order in which they are handled matters. Using a real estate lawyer who does assignments is not optional here, because small wording differences in the assignment agreement change who owes what, and who is on the hook if something goes wrong.

The key documents

The original agreement of purchase and sale: the builder contract, including the assignment clause, the deposit schedule, and the builder’s rules. Everything starts with reading this.
The assignment agreement: the contract between assignor and assignee that transfers the rights and obligations. It sets the price, what is being reimbursed, the premium, when money is paid, and what happens if the builder refuses consent or the project is delayed.
The builder’s consent and assignment forms: the builder’s own paperwork approving the transfer, often with its fee and conditions attached.
Supporting documents: deposit receipts, proof of what the assignor has paid, disclosure statements, and any amendments to the original deal.

What the lawyers do

Each side should have its own lawyer. The assignor’s lawyer reviews the original contract, confirms what the builder allows, and drafts or reviews the assignment agreement to protect the assignor. The assignee’s lawyer reviews both contracts, checks the deposit amounts, confirms the builder’s consent, and makes sure the assignee understands the obligations they are taking on, including the final closing with the builder.

Lawyers also shape the tax mechanics inside the paperwork, such as how the price is split between deposit reimbursement and premium, and how GST/HST is handled. That wording carries real tax consequences. The lawyer works alongside your accountant here, because the legal drafting and the tax reporting have to line up.

The tax picture at a high level

Tax is the part of an assignment sale that trips people up most often, and it is the part where general information stops and personal advice has to begin. What follows is a plain description of the main tax areas that come up. It is general, it is not advice for your situation, and none of it replaces a conversation with your own accountant and real estate lawyer. The tax treatment of assignments is fact-specific, and the wrong assumption can be expensive.

GST/HST on the assignment

The Canada Revenue Agency changed the federal rules in 2022. Effective May 7, 2022, all assignment sales of newly constructed or substantially renovated residential housing are taxable for GST/HST purposes. This came from an amendment to the Excise Tax Act (proposed section 192.1) and applies to assignment agreements entered into after May 6, 2022. Before this change, an assignment by an individual could be either taxable or exempt depending on why the person originally bought the unit. Now, for these residential assignments, the general rule is that GST/HST applies.

A few points follow from that rule, at a general level:

The premium is generally where the tax lands. For assignment agreements entered into on or after May 7, 2022, if the agreement states in writing that part of the price is a reimbursement of the deposit the assignor paid to the builder, that deposit portion is excluded from the amount subject to GST/HST. In other words, the tax generally applies to the assignor’s markup, not to the returned deposit, when the paperwork is worded correctly. This is a strong reason to have a lawyer draft the agreement carefully.
Who collects and remits. The CRA’s position is that the assignor is generally responsible for collecting the GST/HST and remitting it. Where the assignor is a non-resident of Canada, the assignee is generally required to self-assess and pay the GST/HST directly. Who ultimately bears that cost between the parties is negotiated and should be spelled out in the assignment agreement.
Registration and reporting. Because a taxable assignment can require the assignor to account for GST/HST, the assignor may need to think about registration and reporting duties. Whether and how that applies is a question for your accountant.
The builder’s assignment fee. As noted earlier, the fee the builder charges for the assignment is generally subject to GST/HST as well.
Rate. HST in Ontario is 13%. How it applies to a specific deal, and to which portion of the price, depends on the facts, so confirm the numbers with your accountant and lawyer rather than assuming.

There is also the GST/HST new housing rebate and the new residential rental property rebate to consider. These can matter to the assignee at final closing, depending on whether they will live in the unit or rent it out, and on whether they meet the eligibility conditions. Only one new housing rebate can be claimed per home, and where there are effectively two builders in the picture (the original builder and the assignor), the rebate mechanics get complicated. This is squarely accountant and lawyer territory.

Income tax on the profit: business income or capital gain

The second tax question is how any profit is taxed. Many people assume an assignment profit is a capital gain, where only a portion is taxable. That assumption is often wrong. The CRA may treat the profit from an assignment as business income, which is fully taxable, rather than as a capital gain. Which one applies depends on the facts of your situation, and it is not simply a choice you make on your return.

For GST/HST purposes, the CRA looks at the primary purpose behind the original purchase, and it lists factors that point toward a sale being on account of business or an adventure in the nature of trade. Similar thinking runs through the income tax side. Factors that can matter include:

Whether the person offered the unit for sale, or took steps to attract buyers, before or during construction.
The kind of financing used, such as short-term or open financing rather than a long-term closed mortgage.
Whether a stated intention to live in the unit is supported by the person’s actual circumstances.
The person’s pattern of activity, including whether they bought more than one unit or have done similar deals before.

There is also a separate rule to be aware of. For dispositions on or after January 1, 2023, the federal residential property flipping rule generally treats profits from residential property owned for less than 365 consecutive days as business income, fully taxable, with no principal residence exemption. The definition of a flipped property includes the right to purchase a housing unit, which can bring assignment sales within this rule. There are limited exceptions for certain life events. Whether the rule applies to you, and how, is a question for your accountant.

Two further points come up often. The principal residence exemption usually does not shelter an assignment profit, because the assignor never owned and lived in a completed home before selling the contract. And the land transfer tax in Ontario is normally paid by the assignee at final closing, with the Ontario Ministry of Finance taking the position that the tax can apply to the full value being acquired, which may include the assignment consideration on top of the original price. The exact treatment depends on the deal, so confirm it with your lawyer.

Why you must get your own advice

Everything in this section is general. The tax outcome of an assignment depends on your intentions, your history, your residency, the wording of your agreements, and the timing of every step. Two deals that look alike on the surface can be taxed differently. Before you list an assignment or agree to buy one, sit down with a professional accountant and a real estate lawyer and get advice built around your facts. Do not rely on a rule of thumb, a number from a friend, or a general article, including this one, for a decision this size.

The risks for both sides

Assignments can work well, and they can also go wrong. Both sides carry risk, and knowing it in advance is how you protect yourself.

Risks for the assignor

You stay on the hook. In most builder contracts the original buyer remains responsible to the builder until final closing, even after assigning. If the assignee fails to close, the builder can look to the assignor. You do not fully walk away the moment you sign the assignment.
Finding a buyer is not guaranteed. Assignments are a smaller market than resale homes, and marketing may be restricted by the builder. If no assignee is found before closing, the assignor can be forced to complete the purchase themselves, mortgage and all.
Builder consent can be refused or delayed. If the builder will not consent, or drags the process out, the deal can fall apart or run out of time before the closing date.
Tax surprises. An assignor who did not plan for GST/HST on the premium, or who assumed capital gain treatment and instead faces business income, can lose much of the expected profit. This is avoidable with advice up front.

Risks for the assignee

Large cash requirement early. The assignee has to fund the deposits and the premium before they can get a mortgage on the finished unit. That is a lot of money committed well ahead of closing.
Financing the final closing. The assignee still has to qualify for a mortgage and close with the builder later. Lender rules on assignments vary, so financing should be lined up early.
Project risk. Construction can be delayed, and in some cases a project is cancelled. If a project is cancelled, deposits paid to the builder are generally returned, but money the assignee paid the assignor as a premium can be much harder to recover. That is a real and specific danger of assignments.
Taking on the original contract as written. The assignee inherits the terms the assignor agreed to, including the closing date, the occupancy terms, and any builder charges. Anything unfavourable in the original deal comes along with it.

None of these risks means an assignment is a bad idea. They mean the deal has to be read carefully, priced honestly, and papered properly, with legal and tax advice on both sides.

How buying or selling an assignment differs from a resale home

The single biggest difference is what is being sold. In a resale, the seller owns a registered property and transfers title to the buyer, who gets possession and keys on closing day. In an assignment, the assignor owns a contract, not a registered property, and what transfers is that contract. That one difference runs through the whole transaction. An assignment also brings in a third party, since the builder’s consent is usually required, and there are two contracts in play instead of one.

Marketing and finding the deal

Resale homes are listed openly, shown in person, and photographed. Assignments are often different. Builders may restrict or forbid public advertising, so many assignments never appear on the MLS. Instead they move through agents connected to that flow and through direct outreach to buyers who want them. Marketing leans on floor plans and the builder’s feature list rather than staged photos of a finished home.

Financing and timing

A resale buyer arranges a mortgage against a property that exists and can be appraised. An assignee is buying into a contract, has to fund deposits and a premium up front, and only later arranges the mortgage to close with the builder. Lender treatment of assignments varies, so line up financing early with a lender that is comfortable with these deals.

Interim occupancy and final closing

With many pre-construction condominiums there is an interim occupancy period. The unit is ready to live in, but the building has not yet registered, so title does not exist and a mortgage cannot be registered against it. During this period the occupant moves in and pays the builder an occupancy fee, sometimes called phantom rent, until final closing happens and title transfers. An assignee who takes over a condo contract may step into this interim occupancy stage, which is another feature that sets assignments apart from buying a finished resale home. Your lawyer can explain how occupancy and final closing work in your particular building.

Frequently asked questions about assignment sales

Is an assignment sale the same as flipping a house?

No, though the two are related. Flipping usually means buying a property, owning it, and reselling it. An assignment means selling the contract before you ever take ownership, since the deal closes with the builder later. That said, the CRA may treat the profit from an assignment much like a flip for tax purposes, often as fully taxable business income rather than a capital gain, and the residential property flipping rule can reach assignments. Talk to your accountant about how your situation would be classified.

Do I need the builder’s permission to assign my contract?

In almost all cases, yes. The original agreement of purchase and sale usually contains a clause requiring the builder’s written consent to assign. Assigning without consent where it is required can put you in breach of the contract and put your deposits and premium at risk. Always start by reading the original agreement and confirming what the builder allows.

How much does the builder charge to allow an assignment?

It varies by builder and by project, and it is set out in the original contract or the builder’s assignment policy. Builders commonly charge an assignment fee, and that fee can be sizable. The builder’s fee is generally subject to GST/HST. Check the exact amount and conditions in your contract before you plan the numbers.

Who pays the deposits back, and when does the assignor get paid?

The assignee usually reimburses the assignor for the deposits already paid to the builder, and pays the agreed premium. How and when that money changes hands is negotiated. It is common for part of the premium to be held back until final closing, to protect the assignee in case something goes wrong before then. The exact structure belongs in the assignment agreement drafted by the lawyers.

Does GST/HST really apply to an assignment sale?

For assignment sales of new or substantially renovated residential housing, the general federal rule since May 7, 2022 is that GST/HST applies. For agreements entered into on or after that date, the portion of the price that reimburses the deposit paid to the builder can be excluded from the taxable amount if the agreement says so in writing, which generally leaves the premium as the taxed portion. This is general information, and the way it applies to your deal should be confirmed by your accountant and lawyer.

Will my profit be taxed as a capital gain?

Do not assume so. The CRA often treats assignment profits as business income, which is fully taxable, rather than as a capital gain. The outcome depends on your original intention, your history, the timing, and other facts, and the residential property flipping rule may also apply. Get advice from a professional accountant before you count on any particular tax result.

Can the assignee claim the new housing rebate?

Possibly, depending on the facts. An assignee who is an individual may be eligible for the GST/HST new housing rebate, or for the new residential rental property rebate if they rent the unit, provided they meet the eligibility conditions. Only one rebate can be claimed per home, and the mechanics get complicated when there is both an original builder and an assignor. Your lawyer and accountant can work through your eligibility.

Who pays the land transfer tax on an assignment?

In Ontario the land transfer tax is generally paid by the assignee at final closing with the builder, because that is when the property title transfers. The Ontario Ministry of Finance takes the position that the tax can apply to the full value being acquired, which may include the assignment consideration on top of the original purchase price. Confirm the treatment for your deal with your real estate lawyer.

What happens if the building is delayed or cancelled?

Delays are common in pre-construction, and the assignee inherits the builder’s timeline. If a project is cancelled, deposits paid to the builder are generally returned to whoever is entitled to them under the contract, but a premium the assignee paid the assignor can be much harder to get back. This is one of the real risks of buying an assignment, and it is worth addressing directly in the assignment agreement.

Can I still buy into a building that is sold out?

Often an assignment is the only way in once a builder has sold out a project. Buying the contract from an existing purchaser lets you get a unit that is no longer available directly from the builder. Because these units are frequently not advertised publicly, finding them usually means working with an agent connected to that market.

Do I need a lawyer and an accountant, or is an agent enough?

You need all three, and they do different jobs. A real estate agent who does assignments helps you price, market, find, and evaluate the deal. A real estate lawyer reviews the contracts, handles the builder’s consent, and drafts the paperwork so you are protected. An accountant tells you how the deal will be taxed in your situation. The agent does not give legal or tax advice, so do not proceed on a deal this size without the lawyer and accountant involved.

Talk to Firas Swaida about assignment sales

Assignment sales reward people who understand the contract, the builder’s rules, the money, and the tax side, and who handle each step in the right order. If you are thinking about assigning a pre-construction unit, or you want to buy an assignment in Mississauga or the wider GTA, it helps to work with an agent who does these deals regularly and who will be honest with you about what your contract actually allows.

Firas Swaida is a real estate agent with RE/MAX Realty Services Inc., Brokerage in Mississauga, and assignment sales are a core part of his practice. He works with investors on both sides of these transactions, and with people who bought pre-construction and now need to sell before closing. He serves clients across Mississauga and the GTA in English and Arabic. Firas will read your agreement, tell you plainly what it permits, and guide the process from listing or search through to final closing, while making sure your legal and tax questions go to a real estate lawyer and an accountant, where they belong.

To talk through your specific situation, call or text Firas Swaida at (647) 402-4727. He is glad to explain your options and your next steps, in English or Arabic.