Financial Calculations: Cost to You as an Assignee & Seller

Assignment deals offer a shortcut into ownership or a way out of pre-construction contracts—but the money side can get complex fast. As an assignee (the one stepping in) or a seller/assignor (the one exiting), you’ve got deposits, premiums, fees, taxes, and down payments to understand. This guide walks you through real-cost scenarios, what you should calculate in advance, and how to avoid surprises.

1. Key Components of Cost for the Assignee

• Deposit reimbursement: You typically refund the assignor’s deposit that’s already paid to the builder. This is not extra profit—just recovering what was put down. 

• Premium or assignment price: Often the assignor sells the contract above what they paid (if market value increased). You pay that premium on top of the original price. 

• Builder Developer Fees & Assignment Fee: The builder may charge an assignment approval fee or administrative cost. Get clarity on this up front. 

• Closing / interim occupancy / development levies: Depending on the stage of construction, you may face interim occupancy charges, development charges, property tax adjustments, etc. 

• Legal & transactional costs: Lawyer fees, perhaps realtor/agent commissions (if used), and ensuring your financing is in order all cost money. 

2. What Costs Look Like for the Assignor (Seller)

• Original deposit and carrying costs: You recover the deposit (assuming contract allows), but you may have paid for upgrades, interest, financing, or payments in the meantime. These are sunk costs.

• Losing incentives or perks: Sometimes you lose certain builder incentives or rebates if assigned before certain phases. 

• Assignment fee / builder-approval fee: Similar to assignee, you must satisfy whatever fee builder puts on assigning contract. 

• Tax / HST on profit: If you sell contract at a profit (premium), you’ll likely owe HST (in Ontario) on the profit portion. Also, income tax can apply depending on whether seen as personal/business income. 

3. Down Payment & Mortgage-Related Costs to Factor In

• Minimum down payment guidelines (Canada / Ontario):

  • Homes ≤ $500,000 → 5% down payment.

  • Homes between $500,000–$1,499,999 → 5% on first $500,000 + 10% on remaining portion.

  • Homes $1.5 million+ → 20% down payment minimum.

• Mortgage default insurance (e.g. CMHC or insurer) is required if down payment is under 20%. That adds to cost. 

• Deposit in an assignment deal: as assignee you often need to match or reimburse assignor’s original deposit, plus any additional deposit (if original contract required phased deposits)

4. Sample Scenario: What Your Costs Might Actually Be

Component	Assignee Cost	Assignor (Seller) Benefit / Cost
Original Deposit	Refund assignor’s deposit, e.g. $50,000	Recover what you paid upfront
Premium over original price	Suppose assignor paid $500,000, you agree to $550,000 → $50,000 premium	Receive premium (profit)
Assignment fee	Builder may charge e.g. 1-2% or fixed fee	Pay fee before receiving funds
Legal & closing costs	Lawyer + transaction setup maybe several thousand dollars	Pay to finalize assignment agreement
Down payment (mortgage funding)	Based on full purchase price per down-payment rules above	Not directly a cost, but influences what buyer will expect

Final Summary

When entering an assignment deal—as assignee or seller—you need to model everything: deposits, premiums, builder fees, legal costs, and taxes. Down payments still follow the standard Canadian rules depending on purchase price. Being thorough in your financial projections helps you avoid unpleasant surprises and ensures the deal is profitable (for seller) or affordable (for buyer).

Frequently Asked Questions

1. How much down payment do you need on a $500,000 house? At minimum 5% in Canada. So for $500,000, you’d need $25,000 down payment. If your down payment is less than 20%, you’ll also pay mortgage default insurance.

2. What is the deposit for an assignment sale? As an assignee you typically reimburse the assignor’s original deposit paid to the developer. You may also need to pay any additional deposit required by the contract or builder schedule. The size depends on the builder’s original deposit terms.

3. Can you use equity as a down payment in Canada? Yes. If you already own a property, you can use equity from it (for example via refinancing) toward the down payment for another property, if the lender allows. But this depends on lender policies, your debt levels, and other eligibility considerations.

4. What is the minimum down payment for a first time buyer? Same tiered rules apply:

• Up to $500,000 → 5% down

• $500,000–$1,499,999 → 5% of first $500,000 + 10% of the rest

• $1.5 million+ → 20% down

5. How much is the down payment on a $200,000 house? If the home costs $200,000, minimum down payment is 5%, so $10,000. Mortgage default insurance will likely apply if that’s all you put down.