Selling Your Pre-Construction Condo Before Closing: How Assignment Sales Work in Ontario
Last updated: October 2026
Quick Answer: Can You Sell Your Pre-Construction Condo Before Closing?
In Ontario, you can typically sell a pre-construction condo before final closing through an assignment sale, which transfers your rights under the builder's agreement of purchase and sale to a new buyer. You do not own the unit until closing, so you are selling the contract, not the property. Most builder agreements require the builder's written consent and an assignment fee, and some restrict or prohibit assignment entirely. Since May 7, 2022, HST generally applies to the assignment price, minus the part that repays your deposit if the assignment agreement identifies it in writing, and profit on rights held for less than 365 days may be taxed as fully taxable business income. The original buyer often remains responsible to the builder if the new buyer does not close.
Why So Many GTA Buyers Are Asking About Assignments
Buying a pre-construction condo means committing today to a home that may not be finished for years. A lot can change in that time. Your income, family plans, interest rates, and the value of the unit can all move, sometimes in different directions.
If you are in that position, you may be asking a simple question: Can I sell this before I have to close? For many buyers across Toronto, Scarborough, Mississauga, Vaughan, and Markham, the answer is often yes, through an assignment sale. But an assignment comes with the builder's permission, fees, and tax costs that are easy to miss.
This guide explains what you are actually selling, who has to agree, which taxes may apply, and the steps from start to finish.
Quick Start: Pick Your Path
Start with the part of this guide that matches your situation.
What an Assignment Sale Is and What You Are Actually Selling
The original buyer is called the assignor. The new buyer, who steps into the contract, is called the assignee. The contract itself is the agreement of purchase and sale: the signed agreement with the builder that sets the price, deposits, and closing terms.
Many condo buyers move in early, during interim occupancy, which is the period when the builder lets you live in the unit and pay a monthly occupancy fee before the condominium is registered. You do not own the unit until registration and final closing, when title (legal ownership) transfers to you.
That is the line between an assignment and a resale. A resale happens after closing, when you hold title and sell the property itself. Pre-construction freehold homes can be assigned too.
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Assignment vs. Resale vs. Walking Away: Which Exit Fits?
Most pre-construction buyers who want out are choosing among three exits: assigning the agreement before closing, closing and then reselling, or walking away by not closing. Each one carries different permissions, costs, and risks.
Walking away may mean losing your deposit, and the builder may claim more. Our guide to backing out of a real estate deal explains why. The table below compares the three exits.
| Assignment before closing | Resale after closing | Walking away not closing | |
|---|---|---|---|
| When it happens | Before final closing, while the builder still holds title | After final closing, once title is in your name | At closing, by not completing the purchase |
| What you sell | Your rights and obligations under the builder’s agreement | The property itself | Nothing; you exit by not closing |
| Builder consent needed? | Typically yes, in writing; some agreements prohibit assignment | No; your agreement with the builder is complete | Not applicable |
| HST on your sale | Generally yes since May 7, 2022, on the assignment price minus any deposit repayment identified in writing | Different rules apply after closing; ask an accountant | No sale, so no HST on a sale |
| Land transfer tax | The assignee pays at final closing, on a value that may include the assignment price | You pay when you close with the builder; your buyer pays when they buy from you | You do not close, so you pay none |
| Your deposit | Typically repaid by the assignee as part of the assignment price | Credited toward your price at closing | May be lost |
| Can the builder still claim against you? | Often yes, if the assignee does not close, unless the builder signs a release | Not usually under the purchase agreement, once you have closed | The builder may claim more than your deposit |
| Main risk | Consent may be refused, and fees and tax can reduce what you keep | You must finance and close first, then carry closing costs | Losing your deposit and facing a claim for more |
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Does Your Builder Have to Agree to an Assignment?
Common conditions include an assignment or administration fee, the builder's own assignment form, payment of the builder's legal fees, limits on timing, and a ban on listing the assignment on MLS or advertising it publicly. The fee is set by your agreement or the builder's assignment policy. It can be significant, so ask for it in writing early.
Assigning without consent that your agreement requires may itself be a breach of the agreement. That can put your deposit and the deal at risk.
Do you stay responsible to the builder after you assign?
Often, yes. Builder consent does not usually release the original buyer, so if the assignee does not close, the builder may still look to you. You are only let go if the builder agrees in writing to free you from the agreement, which is called a release. Ask whether one is available before you sign.
HST on an Assignment Sale: What Changed on May 7, 2022
In Ontario, that means 13% HST. HST is charged on what the assignee pays you for the assignment, not on the full price of the condo. Part of that payment usually repays the deposit you gave the builder.
That deposit portion is excluded from HST only if the assignment agreement states, in writing, how much of the price repays your deposit. If you are not a resident of Canada, the assignee may have to self-assess and pay the HST directly to the Canada Revenue Agency (CRA), the federal tax authority.
This is general legal information, not tax advice. Speak with an accountant before you set an assignment price.
Nihang Law Professional Corporation · Law Society of Ontario
Income Tax on Assignment Profit: Why 365 Days Matters
Business income is taxed in full. A capital gain is generally taxed on only part of the profit, so the difference can be large. Under the flipping rule, a loss is deemed to be nil, which means you may not be able to deduct it.
Some life events can take a sale outside the rule, such as a death in the family, a separation, a serious illness, an involuntary job loss, or a move for work. If you held the rights for 365 days or more, the flipping rule does not decide the question. Whether your profit is business income or a capital gain then depends on the facts, including why you bought.
This is general legal information, not tax advice. An accountant can assess how your profit may be taxed.
Land Transfer Tax When You Buy Someone Else's Assignment
That taxable value is called the value of the consideration: the total amount the law taxes, which may be more than the price in the builder's agreement. The rules are in Ontario's Land Transfer Tax Act. If the condo is in Toronto, you typically pay the City of Toronto's municipal land transfer tax as well.
Rebates generally go to the person who actually closes and qualifies, not the person who signed first. If you are counting on a rebate, read our guide to Ontario's new-home HST rebate and confirm your eligibility before you agree on a price.
How an Assignment Sale Works, Step by Step
An assignment typically moves through these steps. Your agreement may add others.
- 1Read your agreement's assignment clause, and the builder's assignment policy, with a real estate lawyer.
- 2Ask the builder, in writing, for its consent requirements, fee, timing, and the documents it needs.
- 3Get tax advice before you set a price, so you know how HST and income tax may affect what you keep.
- 4Find a buyer within the marketing limits in your agreement. If public listing is banned, the assignment may have to be marketed privately.
- 5Sign an assignment agreement that is conditional on the builder's consent and states, in writing, the part of the price that repays your deposit.
- 6The builder reviews and consents. The assignee should review the original agreement, the Tarion Statement of Critical Dates (the builder's deadlines for occupancy and closing), and the Tarion warranty coverage they step into.
- 7At final closing, the assignee takes title and pays land transfer tax. You receive your funds when the assignment agreement says, and you report the income for tax.
Common Mistakes to Avoid With an Assignment Sale
- ■Signing with a buyer, or advertising, before reading the assignment clause and getting written consent. This may breach your agreement.
- ■Assuming the builder's consent releases you. Without a written release, you may stay responsible if the assignee does not close.
- ■Leaving the deposit repayment out of the written assignment agreement, which may put HST on the whole amount.
- ■Assuming your profit is a capital gain, when it may be taxed in full as business income.
- ■Pricing without the builder's fee, legal fees, and commission, which can reduce what you keep.
- ■Listing on MLS when your agreement prohibits it, which may cost you the builder's consent.
- ■As a buyer, not budgeting for land transfer tax on the combined value.
Frequently Asked Questions About Assignment Sales in Ontario
How much does a builder charge to approve a condo assignment?
Can I list my condo assignment on MLS?
Can I assign my condo while I am living in it during interim occupancy?
Do I get my deposit back when I assign my condo?
Who pays land transfer tax on a condo assignment in Toronto?
Can I assign my condo if prices have dropped and I have to sell at a loss?
Get Advice Before You Sign an Assignment Agreement
An assignment can be a workable way out of a pre-construction purchase. What you keep typically depends on three things: what your agreement allows, what the builder requires, and how the tax rules apply to your sale.
Qasim Ali, Principal Lawyer at Nihang Law, reviews builder agreements and assignment terms for buyers and sellers across Toronto, Scarborough, and the GTA. As a full-service firm, Nihang Law can also help with your closing and related matters under one roof. If you are weighing an assignment, book a consultation to talk through your options.
Thinking About Assigning Your Condo?
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About the author
Qasim Ali
Principal Lawyer · Nihang Law Professional Corporation · Toronto & Scarborough, Ontario · Law Society of Ontario
Qasim Ali is the Principal Lawyer at Nihang Law Professional Corporation, serving clients across Toronto, Scarborough, and the broader Greater Toronto Area. He provides full-service legal representation across immigration, real estate, family law, criminal law, civil litigation, employment law, wills and estates, and business law.
Nihang Law is particularly recognized for its depth in immigration and real estate law — a combination that serves newcomers and growing families navigating both legal systems simultaneously.
Learn more about Qasim Ali →Sources & References
- Excise Tax Act, R.S.C. 1985, c. E-15, s. 192.1 (New housing — assignment of agreement): https://laws-lois.justice.gc.ca/eng/acts/e-15/section-192.1.html
- Canada Revenue Agency — GST/HST Notice 323, GST/HST Treatment of Assignment Sales: https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/notice323/proposed-gst-hst-treatment-assignment-sales.html
- Canada Revenue Agency — GST/HST Info Sheet GI-120, Assignment of a Purchase and Sale Agreement for a New House or Condominium Unit: https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/gi-120/assignment-a-purchase-sale-agreement-a-new-house-condominium-unit.html
- Canada Revenue Agency — Residential Property Flipping Rule: https://www.canada.ca/cra-property-flipping
- Department of Finance Canada — Explanatory Notes Relating to the Income Tax Act (s. 12(12)–(14)): https://fin.canada.ca/drleg-apl/2022/nwmm-amvm-1122-n-eng.html
- Library of Parliament — Legislative Summary of Bill C-32, Fall Economic Statement Implementation Act, 2022: https://lop.parl.ca/sites/PublicWebsite/default/en_CA/ResearchPublications/LegislativeSummaries/441C32E
- Government of Ontario — Determining the Value of the Consideration for Transfers of New Homes (Land Transfer Tax): https://www.ontario.ca/document/land-transfer-tax/determining-value-consideration-transfers-new-homes
- Land Transfer Tax Act, R.S.O. 1990, c. L.6: https://www.ontario.ca/laws/statute/90l06
- Condominium Act, 1998, S.O. 1998, c. 19: https://www.ontario.ca/laws/statute/98c19
- Condominium Authority of Ontario — Ontario's Condominium Buyers' Guide: https://www.condoauthorityontario.ca/wp-content/uploads/2023/09/Ontarios-Condominium-Buyers-Guide_CAO.pdf
- Tarion — Delayed Closing and Delayed Occupancy: https://www.tarion.com/homeowners/your-warranty-coverage/delayed-closing-delayed-occupancy