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Summary: Since May 7, 2022, assigning a pre-construction or other new home in Ontario is subject to 13% HST. The tax applies to the assignor's profit, not the deposit being recovered, but only if the assignment agreement says so in writing. The assignor collects and remits the tax to the CRA.
What is HST on an assignment sale?
An assignment sale is when the original buyer of a pre-construction home transfers their purchase agreement to someone else before closing. Since May 7, 2022, a federal change to the Excise Tax Act (section 192.1) made every assignment of a newly built or substantially renovated home taxable for GST/HST. In Ontario that means 13% HST applies to the assignment.
This was a real shift. Before May 2022, an individual's assignment was taxable only if they had bought the home with the intention of reselling it rather than living in it. Now intention no longer matters: the assignment of a new home is taxable either way. (Assignments by corporations were generally already taxable.) If you're new to assignments themselves, start with our guide to assignment sales in Ontario.
What part of an assignment is taxable?
HST doesn't necessarily apply to the whole assignment price. An assignment payment usually has two parts: the deposit the original buyer already paid the builder (which they're recovering), and their profit, or assignment premium, on top.
Part of the assignment price | 13% HST? |
Recovery of the deposit you already paid the builder | Not taxed, but only if the assignment agreement says so in writing |
Your profit / assignment premium | Taxed |
The purchase from the builder at final closing | Taxed; a new housing rebate may offset part of it |
The deposit carve-out has a catch: under section 192.1, the deposit recovery is excluded from HST only if the assignment agreement states in writing that part of the price is for reimbursing the deposit. If the agreement is silent on this, HST applies to the entire assignment amount, deposit included. It's a one-line clause that can save thousands, so it belongs in the agreement.
Who charges and remits the HST?
The assignor is generally responsible for collecting the HST from the assignee and remitting it to the Canada Revenue Agency. Because an assignment of a new home is a taxable sale, an individual assignor often has to register for GST/HST to do this, even if they've never run a business. If the assignor is a non-resident of Canada, the obligation flips and the assignee must self-assess and remit the tax instead. Either way the assignee is the one who ultimately bears the cost, on top of the price they'll pay the builder.
Can the buyer still claim the new housing HST rebate?
Yes. An assignee who is buying the home as their primary place of residence can still claim the GST/HST new housing rebate, and where it applies the Ontario new housing rebate, on the purchase from the builder, just like any other new-home buyer. Our new home HST rebate guide covers the eligibility rules.
There's a useful wrinkle for assignments: because there are effectively two sellers (the builder and the assignor), the rebate is calculated on the total tax and total price, which can include the HST you paid the assignor on the assignment. To capture that, file the rebate directly with the CRA rather than through the builder. Two limits apply: only one rebate per home, and the rebate phases out as the total price rises, so a large premium can shrink or eliminate the federal portion.
How HST flows through an assignment, step by step
You agree to an assignment. The assignee agrees to take over the original purchase and pay the assignor a price (deposit recovery plus premium).
Spell out the deposit in writing. The agreement states that part of the price reimburses the deposit, so that part is carved out of HST.
HST is charged on the premium. 13% HST applies to the taxable portion of the assignment (and to the deposit too, if the written carve-out is missing).
The assignor remits it. The assignor collects the HST and remits it to the CRA, registering for GST/HST if required.
Final closing with the builder. The assignee closes with the builder, pays HST on the builder's price, and claims any new housing rebate directly with the CRA.
A lawyer and a tax professional are worth involving early here, because the deposit clause, the registration question, and the rebate filing all have to be handled correctly before closing.
Frequently asked questions
Is HST charged on every assignment sale in Ontario?
On new or substantially renovated housing, yes. Since May 7, 2022, these assignments are taxable for GST/HST regardless of why the original buyer signed. Assignments of resale (previously occupied) homes are treated differently.
Is the whole assignment price taxed, or just the profit?
Generally just the assignor's profit, or premium. The portion that reimburses the deposit the assignor already paid the builder is excluded, but only if the assignment agreement states that in writing. Without that clause, HST applies to the full amount.
Who pays the HST on an assignment?
The assignee ultimately bears the cost, but the assignor is responsible for collecting it and remitting it to the CRA (and may need to register for GST/HST). If the assignor is a non-resident, the assignee self-assesses and remits instead.
Can I still get the new housing rebate if I buy through an assignment?
Yes, if you're buying as your primary residence and meet the usual conditions. You can also fold the HST you paid on the assignment into the rebate calculation by filing directly with the CRA, subject to the one-rebate-per-home rule and the price thresholds that phase the rebate out.
Does HST apply to the deposit I'm paying back to the assignor?
Only if the assignment agreement doesn't carve it out. With the written clause, the deposit recovery is excluded; without it, the deposit is taxed along with the premium.
About the author
Joel Fox is a co-founder and COO at Ownright. He helps run the firm's day-to-day work on Ontario residential closings, refinances, and sales, and writes regularly to demystify the parts of a transaction that most homeowners only encounter once or twice in their lives.
At Ownright, we focus entirely on Ontario residential real estate law. We help buyers and sellers with purchase closings, sales, refinancing, and assignments, pairing a digital platform that tracks every milestone with an in-house legal team you can reach by chat, email, or video call. You can start your closing online or get in touch with any questions.
Legal references: Excise Tax Act, R.S.C. 1985, c. E-15, s. 192.1 (taxable assignment sales of new housing), added by the Budget Implementation Act, 2022, No. 1.
Important note: This article is not legal or tax advice. No one should act, or refrain from acting, based solely on the information in this post or any linked materials without first seeking appropriate legal or professional advice.
