A presale assignment is essentially defined as the re-sale of a property or unit that has not yet been built or is not yet complete. Most commonly, a presale unit is a condominium or townhome, but it can also be a single-family home.
Property Assignment Is Not The Sale Of The Property Itself But Of The Buyers Interest In It
If you are selling a presale assignment, you are not yet the owner of the home and are, in fact, selling your interest in the purchase contract with the developer, to another buyer (the “Assignee”). This is all you are legally able to sell, since title to the property has not yet been transferred to the original purchaser.
The Assignee is purchasing the original purchaser’s interest in the unit and is therefore taking over all of the rights, responsibilities and obligations of the original purchaser.
Costs Of Assignment Sale
There are a number of costs associated with selling a presale unit. Speak with your realtor, accountant or financial advisor, and lawyer to ensure you understand the costs you will be responsible for when selling a presale unit. Some considerations may include:
- Legal fees
- Assignment fees
- Capital gains tax
- Realtor commissions
Is it Sale To Sell A Presale Assignment?
As long as you surround yourself with professionals experienced in this type of transaction, selling a presale assignment should be safe. This type of transaction is not a “do it yourself” type of thing and you should follow the advice and direction of those who understand all aspects of selling a presale assignment.
Hire A Realtor
Hire a realtor who has completed presale assignments with other clients. Ask for references and speak with those individuals to find out any pitfalls or issues they may have experienced. Selling presale assignments is not as straightforward as a “normal” real estate transaction, so you need someone in your corner who has dealt with them previously.
Hire A Lawyer
Utilize an experienced real estate lawyer who can walk you through both the Assignment Agreement and what it means for you. Have them review the Assignment Agreement before you sign it and discuss any concerns that may affect the desired outcome.
Hire An Accountant Or Financial Advisor
Ask your accountant what the tax implications are before you commit to any sale. Will you make a profit and how will this affect your income taxes for the year? Will you be able to offset the additional income or will there be capital gains tax
payable? If you sell the presale assignment at a loss, can you write off the loss when you file your annual income tax return?
Selling a presale assignment can be a smooth process, assuming you have all the pertinent information beforehand. If you are buying the presale unit with the intent to sell it before completion, make sure you fully understand all of the implications to your personal situation before you make the leap.
Although it’s rare, Presale Assignments do not always sell for higher than the original purchase price and you need to ensure your interests are safe and protected.
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