What an assignment is
An assignment is when you sell your agreement of purchase and sale to someone else before the home closes. The new buyer (the assignee) takes over your contract with the builder, repays your deposits, and pays you any profit on top. When it closes, they become the owner and you never take title.
Assignments let investors realise gains without closing. They also carry rules, costs and taxes that should be in your plan before you sign the original agreement.
Builder consent, fees and marketing limits
- Consent. Most builder agreements prohibit assignment without written consent, and some ban it entirely until the home is substantially built or sold out.
- Fees. Builders commonly charge an assignment fee, a flat amount or a percentage, plus legal costs.
- Marketing limits. Many agreements forbid listing the assignment on MLS or advertising it publicly while the builder is still selling. That limits your buyer pool.
Negotiate assignment rights at signing. They’re far easier to get from a sales team on launch day than later.
The 365-day anti-flipping rule
Since January 1, 2023, profit from selling a residential property, including an assignment, that you have held for less than 365 days is treated as fully taxable business income. It doesn’t get the capital gains inclusion rate or the principal residence exemption.
For assignments, the clock starts when you sign the original agreement, not when the home is built. Exemptions exist for certain life events (death, a household addition, separation, personal safety, disability or illness, relocation for work, involuntary job loss, insolvency, or destruction of the property). Holding longer than 365 days doesn’t automatically make a gain a capital gain either: the CRA can still look at whether you were in the business of flipping.
HST on assignment profit
The assignment of an agreement for a new home is generally a taxable supply, so HST can apply to the assignment consideration (your profit on top of your deposits). Whether and how depends on your intent when you bought, whether you were acting as a builder, and how the deal is documented. Factor the possibility into your pricing and get advice from an accountant who handles real estate.
Assigning your contract can also disqualify you from new-home rebates you were counting on, including Ontario’s 2026 HST relief for rental properties.
A simple framework for Erin investors
- Plan to close. Underwrite every purchase as if you’ll close and rent it. Treat an assignment as an option, not the plan.
- Buy what assignees want: well-priced entry models, good lots, early phases.
- Get assignment rights in writing at signing, with a known fee.
- Mind the calendar. 365 days from signing is the earliest point the flipping rule stops applying automatically.
- Talk to an accountant before you list.
Frequently asked questions
Can I sell my pre-construction home in Erin before closing?
Usually, through an assignment, but only if your agreement allows it. Most builders require written consent, charge a fee and restrict public marketing. Negotiate assignment rights when you sign.
Does the anti-flipping tax apply to assignment sales?
Yes. Since January 1, 2023, profits from assigning a residential purchase agreement held for less than 365 days are taxed as business income unless a life-event exemption applies. The holding period starts when you signed the original agreement.
This guide is general information, current to October 5, 2026, and is not legal, tax or financial advice. Programs and rules change; confirm with your lawyer, accountant, lender or the CRA before acting.
