Presale Assignments in BC: Buying or Selling Before Completion

An assignment lets a presale buyer sell their contract before the building is finished, and lets another buyer take it over. Here is how assignments work in BC, from developer consent and the Province's reporting rules to how the money moves, the taxes on each side and what to check before you sign.

The short version

How an assignment works

Under BC's Real Estate Development Marketing Act, an assignment is a transfer of some or all of the rights, obligations and benefits under a purchase agreement. In a presale, the assignor sells their place in the contract and the assignee takes it over, with the original price, completion date and terms. The assignor can assign for any price, more or less than they agreed to pay. At completion, the assignee pays the balance to the developer and the home is registered in the assignee's name.

Resale contracts are different. Since May 16, 2016, contracts prepared by real estate licensees must say they can't be assigned without the seller's written consent and that any assignment profit belongs to the seller, unless the licensee's client gives written instructions otherwise. This post is about presales.

Developer consent and the Province's register

In a development of five or more strata lots in a strata building, the developer can bar assignments altogether or allow them with its consent, and the disclosure statement must say which. If assignments are allowed:

• Consent comes first. The contract must prohibit assignment without the developer's prior consent, and the developer can't consent until it has collected the required information from both parties.
• Fees depend on the contract. The contract may require an assignment fee, which BCFSA warns can be substantial, and a developer's fee for approving an assignment is generally subject to GST.
• You may stay on the hook. Whether the original buyer remains bound to the developer after assigning depends on the agreement.

Since January 1, 2019, developers have reported assignments to the Province's Condo and Strata Assignment Integrity Register. The details include each party's legal name, date of birth, citizenship, social insurance number and tax residency, the purchase price (including upgrades and any earlier lifts), the deposit reimbursement, the lift and any fee paid to the developer. The Ministry of Finance uses the register to check property transfer tax, and shares it with BCFSA and the CRA so that assignments are reported and taxed properly. The rules don't cover bare land strata lots or homes outside a strata.

How the money moves

Take an example presale bought for $700,000, with $70,000 in deposits paid, assigned for a lift of $50,000:

• The deposits stay put. They remain in trust with a lawyer, notary or brokerage, or with the developer if it has deposit protection insurance, and count toward the price at completion.
• The assignee pays the assignor $120,000: a $70,000 deposit reimbursement plus the $50,000 lift, along with GST on the assignment.
• At completion, the assignee pays the developer the $630,000 balance, plus GST on the $700,000 price, less any rebate they qualify for.
• The developer's fee, if there is one, is paid as the contract and the assignment agreement say.

BCFSA warns that if the contract doesn't complete, the assignee may not be able to recover payments made to the assignor, and the assignor may not recover a fee paid to the developer. Agree in writing on how money is held until the developer consents, and what happens if either contract is breached.

Taxes on an assignment

• GST. Since May 7, 2022, assignments of presale contracts for new homes are taxable. GST is 5% of the amount paid for the assignment, and the deposit reimbursement is left out only if the assignment agreement states it in writing. In the example, that is $2,500 on the lift, instead of $6,000 on the full $120,000. The assignor generally collects it.
• Federal income tax. Under the federal flipping rule, profit on a home, or on a right to buy one such as a presale contract, held for less than 365 consecutive days is fully taxable business income, with no principal residence exemption, unless a life event such as a death, a separation, a serious illness, a job relocation or an involuntary job loss applies. Otherwise, whether the profit is a capital gain or business income depends on the facts. Either way, you must report the profit on your income tax return, which the Province says will be checked against the register.
• BC's home flipping tax. For a presale bought from the developer, the count generally starts on the date you paid the deposit and entered the contract. Assign within 365 days and the tax is 20% of your net taxable income, falling to zero at 730 days, with no primary residence deduction. If you buy an assignment, your own count starts on the date of the assignment. Life events such as a death or a separation can exempt you, as can a new estimated completion date from the developer more than 365 days later than the original, with both dates given in writing. You still have to file a return to claim an exemption. I explain how the tax works in BC's Home Flipping Tax.
• Property transfer tax. For a strata unit assigned before the strata plan is deposited at the land title office, the assignee pays it at registration on the total amount paid, including the lift and any upgrades.

If you are selling an assignment

• Read your contract first. Check whether assignments are allowed, the developer's conditions and fee, and any limits on when or how you can advertise.
• Advertising. Ask the developer what it allows before you list the assignment, and get its answer in writing.
• Count the costs. Weigh the lift against the developer's fee, GST, legal fees, commission, income tax and BC's flipping tax.
• Ask about a release. If the developer won't release you, you may still be responsible if the assignee doesn't complete.

If you are buying an assignment

• No cooling-off period. BCFSA says the three-business-day home buyer rescission period doesn't apply to a contract that assigns rights under a contract of purchase and sale, so do your homework before you sign.
• The presale risks become yours. A project can be delayed for many months or not go ahead, a contract may end if completion runs past its dates without an extension, and values can fall.
• Financing at completion. A pre-approval doesn't guarantee a mortgage, and a rate hold usually lasts 60 to 130 days, depending on the lender, which may be shorter than your wait. The amount you can borrow depends on the home's value and your down payment, so if it is valued at less than the price plus the lift, you make up the difference.
• Rebates. The lift counts toward the GST rebate limits, and if the original contract was signed before March 20, 2025, the First-Time Home Buyers' GST Rebate isn't available.
• Your warranty. The home is transferred to you as its first owner, so the 2-5-10 coverage works for you as it would for any new home buyer. See New Home Warranty in BC.

What to check before you sign

• The paperwork. The original purchase agreement, the disclosure statement and every amendment, including the estimated completion date.
• The consent. The developer's written consent, its conditions and its fee.
• The deposits. How much has been paid, who holds it, and whether more is due.
• The assignment agreement. The price, the deposit reimbursement stated in writing, who pays which fees, and what happens if either side breaches.
• The taxes. GST, the flipping rules and property transfer tax, reviewed with an accountant.
• The financing. For buyers, a lender's approval for this home and a plan for completion day.

Questions buyers and sellers often ask me

Can I sell my presale before it is finished?

Only if your contract allows assignments and the developer consents. The developer collects information from you and your buyer first and reports the assignment to the Province.

Is GST charged on a presale assignment?

Yes. Since May 7, 2022, assignments of presale contracts for new homes are taxable. GST is 5% of the assignment amount, and the deposit reimbursement is excluded only if the agreement states it in writing.

How is the profit on an assignment taxed?

If you held the contract for less than 365 days, the profit is generally fully taxable business income, unless a life event applies. BC's home flipping tax can also apply if you assign within 730 days of buying the contract, at up to 20%.

Can I back out after agreeing to buy an assignment?

Not under the three-business-day rescission period, which doesn't apply to assignments. Any right to cancel depends on the assignment agreement, so review it with your lawyer or notary before you sign.

Who pays property transfer tax on an assignment?

The assignee, when the home is registered in their name. For a strata unit assigned before the strata plan is deposited, it is based on the total amount paid, including the lift and any upgrades.

Weighing an assignment? Start with Buying a Presale Condo in BC, and read why mortgage pre-approval matters before you commit to a completion date.

This article is general information, not legal or tax advice. The rules here come from the Province, BCFSA and the Canada Revenue Agency and were current at the time of writing, so speak with a lawyer or notary and an accountant before you assign a contract or buy one. For the Province's guide, see the Condo and Strata Assignment Integrity Register.