GST on a Presale Condo Assignment, and the Rebate It Cannot Restart
Assign a presale condo contract before the building closes, and GST or HST is charged on the assignment, with how much gets taxed decided by one sentence in the paperwork. The costlier fact sits on the buyer’s side: the first-time home buyers’ GST/HST rebate, worth up to $50,000, runs on the date the original agreement with the builder was signed, and no assignment can move it. On our worked example, that costs the assignee $41,250.
This morning’s piece covered the income tax side of the same transaction: the assignor here may also be deemed to have business income under the residential property flipping rule, which turns on a 365-day holding period and is a separate question with separate answers. This piece stays on the sales tax side.
Federal GST relief on a new home runs to $50,000, then runs out. GST/HST new housing rebate, s.254(2), and first-time home buyers’ GST/HST rebate, s.254(2.1), by total consideration. Source: Excise Tax Act s.254. Our arithmetic on the statutory taper formulas.
The law deems the assignment to be a taxable sale of real property
The operative provision is section 192.1 of the Excise Tax Act:
“If a taxable supply by way of sale of a single unit residential complex (as defined in subsection 254(1)) or of a residential condominium unit is made in Canada under an agreement of purchase and sale (in this section referred to as the “purchase agreement”) entered into with a builder of the single unit residential complex or of the residential condominium unit and if another supply by way of assignment of the purchase agreement is made by a person (other than the builder) under another agreement, then the following rules apply for the purposes of this Part: (a) the other supply is deemed to be a taxable supply, by way of sale, of real property that is an interest in the single unit residential complex or residential condominium unit; and (b) the consideration for the other supply is deemed to be equal to the amount determined by the formula A − B …”
It is a deeming rule: no intent test is left to argue. Before it, an individual’s assignment sale “may be either taxable or exempt”, and which one turned on the primary purpose for which they had signed with the builder. That question is gone. Section 192.1 was enacted by section 52 of the Budget Implementation Act, 2022, No. 1 (S.C. 2022, c.10), whose application provision reads: “Subsection (1) applies in respect of any supply by way of assignment of an agreement of purchase and sale if the supply is made after May 6, 2022.” The practical test CRA applies is the date the assignment agreement was entered into, and it puts the same date on it, in GST/HST Notice 323, which also fixes the rates: “The HST applies in the participating provinces at the following rates: 13% in Ontario and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.” Every dollar below is Ontario at 13%: 5% federal, 8% provincial.
The agreement’s wording decides how much of the price is taxed
In the formula, A is the consideration otherwise determined and B is the deposit carve-out, and B is not automatic: it applies only “if the other agreement indicates in writing that a part of the consideration for the other supply is attributable to the reimbursement of a deposit paid under the purchase agreement”. Otherwise, B is zero. Silence costs money, and so does imprecision: what comes out of the tax base is the part of the price “solely attributable” to reimbursing the deposit, so a round number that blends the deposit with part of the premium does not carve out cleanly.
Take one Ontario deal. The builder’s price is $750,000. The first purchaser paid the builder a $150,000 deposit, then assigns the contract for $225,000: the deposit back plus a $75,000 premium.
| What the assignment agreement says | Amount taxed | HST at 13% |
|---|---|---|
| Nothing about the deposit | $225,000 | $29,250 |
| That $150,000 reimburses the deposit paid to the builder | $75,000 | $9,750 |
One sentence in the assignment agreement is worth $19,500. HST at 13% on a $225,000 Ontario presale assignment, with and without the agreement identifying $150,000 as a deposit reimbursement. Source: Excise Tax Act s.192.1(b). Our arithmetic.
The $19,500 difference is the whole cost of a sentence nobody wrote. The rule generalises: with the wording, the tax is 13% of the premium, and without it, 13% of the premium plus the deposit.
The assignor collects and remits, registered or not
Section 221(1) of the Excise Tax Act: “Every person who makes a taxable supply shall, as agent of Her Majesty in right of Canada, collect the tax under Division II payable by the recipient in respect of the supply.” The assignor is the supplier under s.192.1, and CRA’s Notice 323 Q3 agrees: the assignor “would generally continue to be responsible for collecting the GST/HST and remitting the tax to the Canada Revenue Agency.”
Being unregistered does not change that: s.240(1)(b) exempts registration where “the only commercial activity of the person is the making of supplies of real property by way of sale otherwise than in the course of a business,” so an assignor can still owe the duty to collect and remit. A non-resident assignor flips that duty onto the buyer, who “would continue to be required to self-assess and pay the GST/HST directly to the CRA” (Notice 323 Q3). The builder’s own assignment fee is taxable too: GI-120 says it is “generally subject to the GST/HST.”
Note who is actually out of pocket in all this. What s.221(1) makes the assignor collect is the tax “payable by the recipient”, so the assignor writes the cheque to the CRA and the assignee funds it. That makes the deposit sentence above the buyer’s negotiating point, not a courtesy the seller extends to themselves, while the builder’s assignment fee lands on the seller.
The assignment price flows into the buyer’s rebate math
The GST/HST new housing rebate is computed on two totals that look past the builder’s price. Total consideration under s.254(2)(c) takes in the consideration for “any other taxable supply to the particular individual of an interest in the complex or unit”, and total tax paid under s.254(2)(d) takes in the tax on any other supply of an interest in the unit the same way. CRA’s Guide RC4028 says the same in plain language: the house price “plus the purchase price for a taxable assignment to you … before tax” must stay under $450,000 for the ordinary rebate, and Form GST190 has buyers add the assignment price on line 2 if they paid GST or the federal part of the HST on it.
Two federal rebates are in play. The ordinary rebate under s.254(2) is the lesser of $6,300 and 36% of total tax paid, full up to $350,000 of total consideration, tapering to nil at $450,000. The first-time home buyers’ rebate under s.254(2.1) takes the lesser of $50,000 and total tax paid, then subtracts whatever the ordinary rebate gave, full up to $1,000,000 of total consideration and tapering to nil at $1,500,000. Together, for a first-time buyer, they return the entire federal 5% up to $1,000,000.
That rebate runs on the s.123(1) definition: 18 or older, a Canadian citizen or permanent resident, who has not occupied as a primary residence a unit owned or jointly owned “in the calendar year that includes the particular time or in the four preceding calendar years,” with the same test for a spouse or common-law partner. That four-calendar-year look-back is the one anyone who has opened an FHSA has already been through. For a builder purchase, the particular time is when ownership transfers.
The original agreement’s date is the one that counts
The rule that fixes it is section 263.4(3) of the Excise Tax Act, which operates for the first-time buyer provisions: “… if an agreement of sale in respect of a residential complex is entered into before March 20, 2025 and the agreement of sale is later varied, altered or assigned such that it is considered to be entered into after March 19, 2025, the agreement of sale is deemed to have been entered into before March 20, 2025.” CRA’s Memorandum 19-3-10, paragraph 69: “If the agreement of sale, in respect of a residential complex, is deemed to have been entered into before March 20, 2025, no FTHB GST/HST rebate is available in respect of the residential complex.”
CRA’s own Example 11 is this exact transaction:
“On January 15, 2025, Individual A entered into an agreement of sale with a builder for a new residential condominium unit. Individual A decided that they no longer wanted to purchase the unit and entered into an assignment agreement on September 1, 2025, with Individual B, who is an arm’s length party. Individual B plans to occupy the unit as their primary place of residence. Possession and ownership of the unit are transferred to Individual B on February 25, 2026. The initial agreement of sale was entered into on January 15, 2025. Even if the assignment purports to change the date the agreement of sale was entered into, the agreement is deemed to have been entered into before March 20, 2025. Therefore, Individual B is not eligible for an FTHB GST/HST rebate in relation to the purchase of the unit.”
On our deal, with the assignment taxed on $75,000 and the assignee a first-time buyer who will live in the unit, total consideration is $825,000 and total tax paid is $41,250: $37,500 of federal tax on the unit and $3,750 on the assignment. If the builder’s agreement was signed after March 19, 2025, the first-time rebate returns all $41,250, the tax on the assignment included. Signed before March 20, 2025, the rebate is $0, whatever the assignment agreement says. The Ontario new housing rebate of $24,000 applies either way.
Ontario’s enhanced rebate runs on a window of its own
RC4028 describes the Ontario enhanced new housing rebate, with the existing Ontario new housing rebate, as a combined rebate “of up to 100% of the 8% provincial part of the HST paid for the purchase or construction of new or substantially renovated homes situated in Ontario, valued up to $1.85 million”, up to $80,000. The Ontario new home affordability payment, up to $50,000, is “equivalent to up to 100% of the 5% federal part of the HST,” paid by the province, but only to someone “eligible for the Ontario ENHR.”
CRA’s Notice 346 ties the ENHR on an assignment to its own dates: it applies only if “the original agreement of purchase and sale and the assignment agreement are both entered into on or after April 1, 2026, and on or before March 31, 2027.” The anti-refresh drafting appears again, on a different date: an agreement signed before April 1, 2026 that is later assigned “is deemed to have been entered into before April 1, 2026”, so the buyer “is not entitled to the Ontario ENHR”. That window closes on March 31, 2027.
Missing it is not the end of the provincial side, and this is the part most likely to be worth real money to a reader. Notice 346 says the same buyer “may still be eligible for the Ontario new housing rebate or the Ontario first-time home buyers’ rebate”, and RC4028 puts the Ontario first-time rebate at up to $80,000 of the provincial part on “the same eligibility conditions as the federal FTHB GST/HST rebate”. Same conditions means the same agreement date, so a presale signed before March 20, 2025 loses that one too, for the same reason. A contract signed in mid-2025 that misses the enhanced window keeps it, and $80,000 is a long way from the $24,000 the ordinary Ontario rebate caps at.
What the signing date decides, in one table
The rebate side of all this turns on a single variable, the date the original agreement with the builder was signed. For an Ontario assignee who is a first-time home buyer and will live in the unit:
| Original builder agreement signed | Federal relief on the 5% | Ontario relief on the 8% |
|---|---|---|
| Before March 20, 2025 | New housing rebate only: up to $6,300, and nothing at all past $450,000 of total consideration | Ontario new housing rebate, up to $24,000 |
| On or after March 20, 2025 and before 2031, outside the window below | First-time home buyers’ rebate, up to $50,000 | Ontario first-time home buyers’ rebate, taking combined provincial relief to as much as $80,000 |
| April 1, 2026 to March 31, 2027, with the assignment agreement inside the same window | First-time home buyers’ rebate up to $50,000, topped up by the Ontario new home affordability payment where the federal rebates leave part of the 5% unrecovered | Enhanced new housing rebate, taking combined provincial relief to as much as $80,000 |
Two limits on the bottom two rows. Combined relief on the provincial part cannot exceed the lesser of $80,000 and the 8% actually paid, and the affordability payment “is reduced by the GST/HST new housing rebate and FTHB GST/HST rebate that you are entitled to”, so it tops the federal side up rather than doubling it.
The $450,000 threshold still bites without the first-time rebate
A buyer who is not a first-time home buyer, or whose contract predates March 20, 2025, still has only the ordinary rebate and its $450,000 threshold, and the assignment price counts against it. A $340,000 unit alone carries federal tax of $17,000 and a rebate of $6,120. The same unit by assignment with a $40,000 premium pushes total consideration to $380,000, federal tax to $19,000, and the rebate to $4,410: $2,000 more tax paid, $1,710 less back, on a total the builder’s price alone would never reach.
Filing the rebate separately can capture tax paid to both sides
Only one new housing rebate application can be made per house, and an assignee has paid tax to two different people, so a claim routed through the builder leaves out the tax paid to the assignor. CRA says so twice. Notice 323 Q4: the “assignee purchaser may want to file their new housing rebate application directly with the CRA rather than through Builder A”, so the claim can “include in the new housing rebate application the tax paid to Builder A and the tax paid to the assignor”. Guide RC4028 names the route: if you “also paid tax to a previous purchaser to purchase their interest in the house (by way of an assignment of the purchase and sale agreement), you may want to file the rebate using application Type 2 in order to claim both the tax paid to the builder and to the person who assigned you the agreement”.
Filing it yourself comes with a deadline and a document list. Section 254(3) of the Excise Tax Act: a rebate “shall not be paid to an individual unless the individual files an application for the rebate within two years after the day ownership of the complex or unit is transferred to the individual”. RC4028 asks for Form GST190, Form RC7190-ON where the Ontario rebate is claimed, and “a copy of your statement of adjustments (including, if applicable, the documents for the assignment of the purchase and sale agreement)”, and warns that without all of it “your rebate may be denied”.
On closing day, assignment buyers also run into land transfer tax, which runs its own first-time buyer test in Ontario, Toronto and BC. The GST or HST calculation decides what gets taxed and who remits it; the rebate calculation decides how much comes back, and for a buyer counting on the first-time rebate, that turns on the date of the original agreement, not the assignment.
Rates and figures as of October 31, 2026, Ontario at 13% HST throughout. This is general information, not tax advice for a specific transaction.
Disclaimer: The content on bestcanadianstocks.ca is for informational and entertainment purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions. The assignment rule is quoted from the consolidated Excise Tax Act, section 192.1, retrieved from Justice Laws on October 31, 2026, with its application date from the enacting provision in the Budget Implementation Act, 2022, No. 1 (S.C. 2022, c.10, s.52). The collection duty is ETA s.221(1) and the registration exception is s.221(2)(a) and s.240(1)(b). The GST/HST new housing rebate and the first-time home buyers’ GST/HST rebate, their caps, thresholds and taper formulas, are quoted from ETA s.254(2) and s.254(2.1), and the rule that an assignment cannot restart the agreement date is ETA s.263.4(3). CRA GST/HST Notice 323 supplies the pre-2022 position, the GST/HST rates by province, the remittance answers and the new housing rebate consequences of an assignment; CRA GST/HST Memorandum 19-3-10 supplies the first-time home buyer definition and Example 11; CRA Guide RC4028 supplies the $450,000 threshold read to include a taxable assignment, the Form GST190 instruction, the $24,000 Ontario new housing rebate, and the summaries of the Ontario enhanced new housing rebate and the Ontario new home affordability payment; CRA GST/HST Notice 346 of August 2026 supplies the Ontario ENHR dates and its assignment rules; CRA Info Sheet GI-120 supplies the builder’s own assignment fee. All dollar figures for the worked Ontario deal are our own arithmetic at 13% HST, of which the federal part is 5% and the provincial part 8%.
