How To Sell The Presale Condo: The Right Way
How to Sell A Presale Condo?
This blog will not only answert that question but it’ll explain the right way to sell one.
Entering into an agreement to purchase a pre-construction condo is when you contractually commit to purchase a condo before or during its construction — but you would not move in until it is complete, or sufficiently complete to do so.
The developers know certain local real estate agents and recognize their efforts in assisting buyers, agents like Ravi Bhindi with iPreSales can assist you.
Many pre-construction condo buyers know, many things can happen between the time you buy and the time you take possession.
From a builder’s perspective, there may be construction delays and sometimes projects are even cancelled. Buyers however, face different risks. If you are at the point where you are thinking of trying to sell the condo before you take possession, you are most likely embarking on what is referred to as an assignment.
Option for Assignment
This happens when the original buyer assigns their rights and obligations under the contract to purchase a pre-construction condominium unit, or suite – to another buyer.
The new buyer will then take their place under the contract, including obtaining all of the rights and obligations as they are detailed in the original agreement with the developer.
Therefore, by agreeing to the assignment, the new buyer will be purchasing the original purchaser’s (which is you) agreement to complete the final sale with the developer.
You may be pondering the question as to why there is a need for an assignment at all – why not just sell the unit or suite to the new buyer directly…
The reason behind this, is that you don’t own it until the condo unit is built, and when you have closed on the purchase and ownership has formally transferred to your name
Option for Flipping
You also have the flipping option, of course, that is when you’re making your purchase with the intention of selling.
The selling of your presale condo is tricky: From an investment perspective, selling a contract for a pre-construction unit can be very lucrative. In British Columbia, the government created a database to track pre-construction condo flipping.
It will contain comprehensive information on sales that fall into this category, which will be shared with federal and provincial authorities.
From an investment perspective, selling a contract for a pre-construction unit can be very lucrative. In British Columbia, the government created a database to track pre-construction condo flipping.
Option for Assignment
Selling of your Presale condo as an assignment happens when the original buyer assigns their rights and obligations under the contract to purchase a pre-construction condominium unit, or suite – to another buyer.
The new buyer will then take their place under the contract, including obtaining all of the rights and obligations as they are detailed in the original agreement with the developer.
Therefore, by agreeing to the assignment, the new buyer will be purchasing the original purchaser’s (which is you) agreement to complete the final sale with the developer.
You may be pondering the question as to why there is a need for an assignment at all – why not just sell the unit or suite to the new buyer directly…
The reason behind this, is that you don’t own it until the condo unit is built, and when you have closed on the purchase and ownership has formally transferred to your name
Don't Forget: Capital Gains Tax & HST
Important information to know when you sell a pre-construction condo contract – the Canadian Revenue Agency (CRA) will almost always classify you as a builder. In these situations, you owe the government not only capital gains tax, but HST. The HST will apply to the deposit you’re getting back when you sell, as well as the profits you make from marking up your price.
As the assignor, it is your responsibility to collect HST from the assignee. Unfortunately, getting the person who purchases your contract to take on these costs can be a difficult task. In practice, assignors typically aren’t adding that certain percent to their sale price. That said, these taxes have to be paid, one way or another. When it comes to capital gains tax, remember that the rate of inclusion percent
As the assignor, it is your responsibility to collect HST from the assignee.
Bottom Line Is..
When considering pre-construction condo flipping it can be highly profitable, but sellers should exercise caution. It’s important to know the taxation rules that apply to your precise situation.
A certified accountant can help ensure that your sale is above board, which will help you prevent an unpleasant call from the taxperson in the future.
Local developers and banks know certain local real estate agents and recognize their efforts in assisting buyers. Agents like Ravi Bhindi with iPreSales can assist you.
Hire A Realtor That Knows Presales Inside Out
Whether you’re looking for a condo pre-construction or resale, it’s always best to work with a real estate agent that is experienced in the Greater Vancouver Market. By working with an agent who has experience in both pre-construction and resale condos, you can rest assured that you’ll get all the information you need to make an informed decision about your next purchase.
For more information on condo developments in Surrey, contact the team at Ipresalecondos.
Ipresale Condos is not just an agency that sells real estate, but our agents believe in educating each client deal with their own professional situation. Please call or text at 604-825-8881 or email at info@ipresalecondos.com
