As usual, the transaction may be subject to financing arranged on the higher price that the new buyer has agreed to pay. However, since some mortgage brokers may not be familiar with financing an assignment transaction, it can be difficult to obtain permission to purchase the new buyer. This is something that needs to be looked at long before the original buyer and the new buyer seriously begin their negotiations. Before concluding, the developer should determine the buyer`s ownership intentions, given that a discount on new residential real estate awarded by a buyer who plans to lease the property has many potential negative consequences for all parties. The transferee may be allowed to claim the rebate for new rental units directly from the CRA if the buyer intends to acquire the property for long-term rental as a place of residence. In addition, the amount due on the conclusion of the initial contract of sale may have to increase, since the new buyer cannot transfer the discount on new residential immovable property to the contracting authority. In such cases, the buyer may wish to apply for a new housing rebate directly with the CRA and not through Contractor A. In this way, the transferee`s buyer may include the tax paid to Contracting Authority A and the tax paid to the beneficiary of the right in the application for remunerated housing and, where applicable, a provincial rebate for new housing. In order to clarify the tax implications of assigning a sales contract, we will discuss the main thoughts on income tax, GST/HST, and CRA review for both parties.
Before we begin, let`s look at the role of the three parties involved in this type of transaction: the tähdner, the transferee and the builder. If the first purchaser (the owner) makes a taxable sale of an interest in a home, i.e. the first purchaser is a contractor and shortens the purchase and sale agreement to a buyer of the transferee, the first purchaser would not be entitled to a GST/HST new housing rebate or a provincial new housing rebate, since he did not acquire the house as a principal residence. Even if the sale of the shares of the house by the first purchaser is not subject to the GST/HST (i.e. in situations where the first purchaser is not the owner of the house), the first purchaser would not normally be entitled to a GST/HST rebate on new housing or a provincial rebate for new housing, because the conditions for using discounts are not met (e.g.B. Ownership of the house would not be transgressed to the first buyer, but to the buyer). (On the other hand, some builder agreements allow the builder himself to freely assign the contract to any other builder registered with Tarion, which completely releases the builder from its obligations.) The quintessence is that the basic clause of a purchase and sale contract may or may not allow the assignment of the contract to a new buyer, and if it is authorized, it is subject to certain conditions such as obtaining the written agreement of the contracting authority. . . .