Administrative Policy
2 May 2024 GST/HST Interpretation 246050 - Assignment of an interest in real property and direction of title change
An individual agreed to purchase a pre-construction condominium unit for personal purposes, and a related individual agreed to purchase a second such unit for rental as a residence. Now, before the closing of the purchases, the two individuals would like to jointly own both units for rental as places of residence for individuals. This could be done by entering into agreements to assign rights and obligations respecting their purchase agreements.
CRA indicated that:
- the assignment by the purchaser of the agreement is normally considered to be a sale of that first purchaser's interest in the new house which, pursuant to s. 192.1, would be deemed to be a taxable supply; and
- pursuant to s. 155, there would be deemed FMV consideration for such taxable supplies if the recipient in each case was not a registrant who acquired the property for consumption, use or supply exclusively in the course of commercial activities.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Supply | a direction letter to change how title is conveyed at closing gives rise to a real estate supply | 258 |
| Tax Topics - Excise Tax Act - Section 155 | s. 155 engaged where two related individuals with respective new condo purchase agreements directed that title to both be transferred to them in co-tenancy | 209 |
| Tax Topics - Excise Tax Act - Section 256.2 - Subsection 256.2(3) | where condo unit acquired in co-ownership, NRRP rebate conditions applied separately to each purchaser | 37 |
GST/HST Notice 323, Proposed GST/HST Treatment of Assignment Sales, May 2022
Treatment of assignment sales (of an agreement with a builder for a new home) under pre-s. 192.1 rules (p. 1)
Under the current GST/HST rules, an assignment sale … made by an individual is generally taxable if the individual had originally entered into the agreement of purchase and sale with the builder for the primary purpose of selling their interest in the real property. If, on the other hand, the individual had originally entered into the agreement of purchase and sale for another primary purpose (for example, to occupy the house as a place of residence), the assignment sale is generally exempt.
Effect of s. 192.1 on treatment of deposits (pp. 3-4 under Q.2)
Where an assignment agreement is entered into before May 7, 2022, and the assignment sale is taxable, the total amount payable for the sale of the assignor’s interest to the assignee is subject to the GST/HST, including any amount the assignor paid as a deposit to the builder, whether or not such an amount is separately identified.
Where an assignment agreement is entered into on or after May 7, 2022, and the assignment agreement indicates in writing that a part of the consideration is attributable to the reimbursement of a deposit paid by the assignor to the builder under the purchase and sale agreement, the proposed amendment excludes the amount attributable to the deposit from the consideration for a taxable assignment sale.