Can You Claim a Loss on a Condo Assignment Sale in Ontario?

If you're thinking of selling your pre-construction condo assignment at a loss, be aware: the CRA may not allow you to deduct the loss at all — not as a capital loss and not as a business loss.

Recent CRA Position: No Deduction on Assignment Losses

In recent audits and tax rulings, the Canada Revenue Agency (CRA) has disallowed losses on condo assignments by arguing that:

• The purchase and sale of pre-construction units is a speculative activity, not a business or capital investment.

• The assignment right itself is not a capital asset, and therefore, a loss on its disposition is not deductible under capital gains rules.

• If there was no intent to profit, or if the CRA believes you weren't truly engaged in a business, they may argue there's no loss to recognize at all.
  

In short, CRA may treat the transaction as "outside the scope of income tax deductibility" — meaning you're out of pocket, and there’s no tax relief.