Presale Condo Assignment Tax Treatment

A presale-condo assignment is the sale of the original purchaser's rights under a presale purchase agreement to a new buyer (the assignee), before the building completes and title registers. Three tax overlays apply. First, GST: effective May 7, 2022, every assignment of a new or substantially-renovated residential property is GST-taxable under amendments to the federal Excise Tax Act — the assignor charges 5% GST on the assignment fee (consideration paid over and above the deposit refund) and remits to CRA. Second, income tax: CRA treats assignment profit as 100%-included business income, not a 50% capital gain, where the assignor never intended to occupy. Third, BC Speculation and Vacancy Tax (SVT) does not apply to an unfinished presale unit until it completes.

An assignment fee is not automatically a capital gain with half of it taxable. CRA's default position is that anyone assigning before completion never genuinely intended to occupy and should be taxed at 100% inclusion as business income. The "intended occupancy" test is fact-dependent — documented evidence (mortgage pre-approval for owner-occupancy, school enrolment, moving plans, lease termination on the existing rental) materially affects whether CRA accepts capital-gain treatment on audit. The federal anti-flipping rule further hardens the question on quick-flip patterns. BC Home Flipping Tax generally does not apply to pre-title assignments, but does apply if the assignor takes title and then flips.