Do I Pay GST When I Assign My Presale? Clearing the Confusion in BC

Since May 2022, the CRA has implemented strict new rules on how GST applies to presale assignment sales. Whether you're in Surrey, Coquitlam, or Langley, here's what you need to know before you sell. Assigning a presale contract—selling your right to a unit before it is completed—is a popular strategy in Metro Vancouver and the Fraser Valley . However, it is also one of the most misunderstood areas of real estate taxation. Since May 2022, the CRA has implemented strict new rules that changed how GST applies to assignment sales. Whether you are in Surrey , Coquitlam , or Langley , here is the definitive guide to GST on assignments and how to avoid the "double taxation" trap. 1. The 2022 Rule Change: No More "Primary Residence" Loophole Before May 7, 2022, you could often avoid paying GST on an assignment if you could prove your original intent was to live in the home as a primary residence. The New Reality: The CRA has removed the "intent" test for GST. Now, all assignment sales of new residential housing are subject to 5% GST. It no longer matters if you were planning to move in or if you are an investor; the assignment itself is now considered a taxable supply. 2. What Exactly is Taxed? GST on Profit vs. Price This is where the most confusion lies. There are actually two separate "GST events" in an assignment sale: A. GST on the Assignment Fee The Profit The person selling the contract the Assignor must collect 5% GST on the "Assignment Fee." What's included? The CRA considers the taxable amount to be the entire amount you receive from the new buyer, minus the deposits you already paid to the developer. Example: You bought a condo in Burquitlam for $500k and paid a $100k deposit. You assign it to a new buyer for $650k. Your "Assignment Fee" is $150k. You the Assignor are responsible for collecting 5% GST on that $150k $7,500 and remitting it to the CRA. B. GST on the Original Purchase Price The new buyer the Assignee is responsible for paying the 5% GST on the original contract price to the developer when the building completes. Example: In the scenario above, the new buyer will pay 5% GST on the…

This article is part of the PresaleProperties.com BC real estate guide library. It is intended for buyers comparing presale condos, townhomes, assignments, deposits, completion timelines, neighbourhoods and developer incentives across Metro Vancouver and the Fraser Valley.

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