Buying a home before it is built means paying deposits years ahead of closing. The protections differ for condos and freehold homes, and selling your contract before closing (an assignment) has its own tax rules.
Deposits on a new freehold home
Tarion protects deposits on new freehold homes up to $60,000 for homes priced at $600,000 or less, and 10% of the price up to $100,000 for higher-priced homes. Tarion has announced that buyers will need to register their purchase with it to keep the full protection, a change now set for January 1, 2027. Source: Tarion.
Deposits on a new condo
The Condominium Act requires the builder to hold condo deposits in trust. If the builder ends the agreement, the deposit must be returned in full within 10 days; if it is not, Tarion covers up to $20,000 plus limited interest. Source: Tarion.
The 10-day cooling-off period on new condos
When you buy a new condo unit from a builder, you have 10 days after receiving the signed agreement and the disclosure statement to change your mind and get your deposit back. Section 73 of the Condominium Act sets out the details. Source: Condominium Authority of Ontario. Use those days to have a lawyer review the agreement.
Assignment sales and tax
Selling your right to buy a new home before closing is an assignment. Since May 7, 2022, every assignment of a new or substantially renovated home is taxable for GST/HST, but the part of the price that repays your deposit is not taxed. The builder’s assignment fee is generally taxable too. Your profit on an assignment is business income in the year you assign. Source: CRA GST/HST info sheet GI-120.
Plan the numbers
See what you can get back on the tax with the new home GST/HST rebate calculator, budget the closing with the land transfer tax calculator, and note that interim occupancy fees and adjustments on a new condo can add to the price. If you sell within a year of closing, the capital gains on property calculator explains the flipping rule.
Try the new home gst/hst rebate calculator →
Official source
Tarion · Coverage before you close
This guide explains general rules. Confirm your figures with your lender, lawyer, or the official source before you act.