BC Realtor New Construction Guide: Presale Contracts, GST & Developer Assignments (2026)
New construction transactions are among the most complex and high-risk deals in BC real estate. Developer contracts heavily favour the developer, GST adds an unexpected cost layer, assignment rules have shifted dramatically, and completion timelines are notoriously unreliable. This guide gives BC realtors the framework to protect their clients and provide genuine expertise on every new construction deal.
Presale vs. New Construction: Understanding the Types
"New construction" isn't a monolithic category. BC realtors encounter several distinct types of new construction transactions, each with different risk profiles and processes.
| Type | Description | Risk Level | Key Considerations |
|---|---|---|---|
| Presale condo (under construction) | Buying from developer before or during construction; completion 1–3 years out | Highest | Developer contract, no physical inspection possible, completion risk, market value change by completion |
| Presale townhome or detached | Similar to condo but different strata/title structure | High | Often more buyer-favourable contracts than high-rise; still has completion risk |
| Move-in ready new construction | Just completed; developer selling unsold inventory | Medium | GST still applies; can inspect; completion risk eliminated; disclosure statement still required |
| Custom build (builder contract) | Buyer commissions a builder on their own lot | Medium-High | Building contract terms critical; cost overruns; permit delays; builder insolvency risk |
| Spec home (builder speculation) | Builder built without a buyer; selling as new home | Low-Medium | Similar to resale but GST applies; new home warranty (Travellers/HPO) important |
The BC Developer Disclosure Statement: What to Review
Under BC's Real Estate Development Marketing Act (REDMA), developers must provide a disclosure statement before any presale contract is signed. Buyers have a 7-day rescission right after receiving it. This is the most important document in any presale transaction — and most buyers don't read it carefully enough.
Disclosure Statement Red Flags Checklist
GST on New Construction in BC: The Complete Picture
GST is one of the most misunderstood costs in BC new construction. Get this wrong and your buyer could face a $20,000–$50,000 surprise at completion that derails their financing.
GST / New Housing Rebate Reference Table
| Purchase Price | GST (5%) | New Housing Rebate | Net GST Payable | Eligibility |
|---|---|---|---|---|
| $350,000 | $17,500 | $6,300 (full rebate) | $11,200 | Primary residence — full rebate |
| $400,000 | $20,000 | $6,300 (full rebate) | $13,700 | Primary residence — full rebate |
| $450,000 | $22,500 | $6,300 (full rebate) | $16,200 | Just at threshold — full rebate |
| $500,000 | $25,000 | $3,150 (partial rebate) | $21,850 | Partial rebate ($450K–$499,999 phase-out) |
| $600,000 | $30,000 | $0 | $30,000 | Above $500K — no rebate |
| $900,000 | $45,000 | $0 | $45,000 | No rebate; investor or high-value |
GST Rebate Eligibility Rules
- •Buyer must use the home as their primary place of residence
- •Or: a close relative (parent, child, grandparent, sibling) must use it as their primary residence
- •Purchase price must be under $500,000 for any rebate
- •Investors (not using as primary residence)
- •Buyers whose relative will rent it, not live in it
- •Buyers purchasing at $500,000 or above (no rebate)
- •Corporations (individual must claim)
- •Developer often credits the rebate at completion — buyer assigns their right to the rebate to the developer
- •If developer credits it, buyer must actually qualify and live there — if they don't, CRA will claw back from the buyer
- •Investor: no credit — full 5% GST payable at completion
- •Investors purchasing a new condo to rent may qualify for this separate rebate
- •Covers 36% of the GST paid, up to $8,750
- •Conditions: must be rented to an arm's-length tenant as their primary residence; cannot be short-term rental
Assignment Clauses: What Changed After 2021 and What BC Realtors Must Know
Presale assignment used to be a common strategy for buyers and investors alike. Post-2021 CRA rule changes have fundamentally altered the tax treatment of assignments — and created significant liability for clients who weren't warned.
Assignment Tax Rules (Post May 7, 2022)
All assignment income is fully taxable
The federal Budget 2022 confirmed: profit from assigning a new home purchase is fully taxable as business income — not capital gains — regardless of the seller's intention when they bought. The 50% capital gains inclusion rate does not apply.
GST on the assignment
If the assignment is deemed a supply of real property for GST purposes, the assignor may owe GST on the assignment proceeds. CRA has increased scrutiny on this. Professional accounting advice is essential.
Developer assignment consent and fees
Most developer contracts require consent to assign and charge a fee (typically 1–2% of purchase price or the assignment gain). Some contracts prohibit assignment entirely. Read the contract.
Anti-flipping rule (2023+)
Properties sold within 12 months of completion are subject to the residential property anti-flipping rule (full income inclusion on gains). Combined with the assignment rules, short-term presale strategies have become significantly less profitable.
Deposit Structure and Buyer Protection
New construction deposits in BC are larger than typical resale deposits and are at risk for longer periods. Understanding how they're structured — and how they're protected — is critical client education.
Typical BC Presale Deposit Structure
| Deposit Stage | Typical Amount | Timing | Held In |
|---|---|---|---|
| Initial deposit | 5% of purchase price | On signing presale contract (within 1–5 business days) | Developer's lawyer/notary trust account |
| Second deposit | 5% of purchase price | 6–12 months after initial deposit | Trust account |
| Third deposit (some developments) | 5% of purchase price | 12–18 months after initial | Trust account |
| Balance (completion) | Remainder (often 80–85%) | At completion/possession | Paid to developer on closing |
✅ Deposit Protection Under REDMA
- • All deposits must be held in trust — the developer cannot access them until completion
- • Deposits earn interest while in trust (typically credited to buyer)
- • If the developer cancels the project, all deposits must be returned in full plus interest
- • REDMA violations (including mishandling deposits) can result in developer prosecution
- • Realtor's due diligence: confirm the trust holder is a licensed lawyer or notary — not the developer directly
New Home Warranty: BC's Homeowner Protection Office (HPO)
All new homes in BC built by licensed residential builders are required to carry mandatory home warranty insurance under the Homeowner Protection Act. This is a significant buyer protection that realtors should actively highlight.
| Coverage Type | Duration | What It Covers |
|---|---|---|
| Materials & Labour | 2 years | Defects in materials and labour (excluding electrical, plumbing, heating, gas systems) |
| Delivery & Distribution Systems | 2 years | Plumbing, heating, gas, electrical systems |
| Building Envelope | 5 years | Rainwater penetration through the building envelope — critical in wet BC climate |
| Structural Defects | 10 years | Structural integrity issues that affect the load-bearing elements |
Important: Verify the builder is a licensed residential builder (Homeowner Protection Office website) and that the warranty is registered for the specific unit. Owner-builder homes may have different warranty requirements — ask to see the warranty certificate.
6 Buyer Conversation Scripts for New Construction Deals
"One thing that catches a lot of presale buyers off guard is GST. New construction homes have 5% GST on top of the purchase price — and at $800,000, that's $40,000. The good news is there's a New Housing Rebate if you're using the home as your primary residence and the price is under $500,000 — but since this unit is above that threshold, you'll pay the full 5% GST with no rebate. That means your total all-in cost is closer to $840,000, not $800,000. We need to make sure your mortgage is structured with that in mind."
"I want to make sure you know about the tax rules before you sign this presale. If you buy and then assign the contract before completion, the government now taxes any profit as 100% ordinary income — not as a capital gain. So if you made $200,000 on the assignment, you'd pay full income tax on that, potentially $100,000+ depending on your tax bracket. Please talk to your accountant about this before you sign. It doesn't mean you can't do it, but you need to know the numbers going in."
"This is an important protection for you. Once you receive the disclosure statement from the developer, you have 7 days to rescind — cancel the contract — for any reason. I want you to actually read it and have your lawyer review it during those 7 days. Don't just flip through it. The disclosure statement tells you the estimated strata fees, the completion date, what happens if the project is delayed, and what your assignment rights are. This is your best window to catch anything unfavorable before you're legally committed."
"The biggest risk in any presale is that market conditions change between now and when you complete — potentially 2–3 years from now. Your financing approval today may not reflect the rates or qualifying criteria at completion. And the value of the unit at completion may be higher or lower than what you're paying. I want us to think through: if rates are higher at completion and the unit is worth less, can you still make the purchase work? Let's stress-test that before we proceed."
"I know the developer's sales team may pressure you to sign quickly. My strong recommendation is that you have your own real estate lawyer — not the developer's lawyer — review this contract before you sign. Not after. Developer contracts are written entirely in the developer's favor, and there may be terms around change orders, substitution materials, or assignment that you'll want explained. The review costs a few hundred dollars but could save you tens of thousands. Can I refer you to someone who specializes in new construction contracts?"
"That's a great question and an honest answer is: it depends. Presales can offer entry at below-future-market pricing in rising markets — and there's no doubt some buyers have done very well. But they also carry risks that resale doesn't: completion risk, no physical inspection, developer substitution rights, and tax changes that have made short-term assignments much less profitable. If you're buying as a primary residence and you can hold for the long term, it can make sense. If you're looking for a short-term flip, the new tax rules have changed that math significantly. Let's talk through your specific situation."
Frequently Asked Questions
Does GST apply to new construction homes in BC?▼
Yes. GST (5%) applies to new construction homes in BC. The New Housing Rebate can reduce or eliminate the GST if the buyer meets eligibility criteria — the purchase price must be under $450,000 for the full rebate, or under $500,000 for a partial rebate. The buyer must be purchasing as their primary residence. Investors who don't intend to live in the unit typically pay the full 5% GST with no rebate.
What is a presale assignment and how does it work in BC?▼
A presale assignment is the sale of a buyer's contractual interest in a new home before completion. The original buyer (assignor) transfers their rights under the purchase contract to a new buyer (assignee). Most developer contracts restrict assignments — requiring developer consent and an assignment fee (typically 1–2% of the purchase price). Since 2021, CRA has required that all assignment income be reported as business income (fully taxable, not capital gains). Buyers intending to assign must understand the tax implications before signing the original contract.
What is a developer disclosure statement in BC and what should buyers look for?▼
Under BC's Real Estate Development Marketing Act (REDMA), developers must provide a disclosure statement to buyers before any purchase contract is signed. The disclosure covers: project details and phasing, strata plan and bylaws, estimated strata fees, known restrictions, legal encumbrances, and estimated completion date. Buyers have a 7-day rescission right after receiving the disclosure statement. Key red flags: unusually high estimated strata fees, extensive pending approvals or rezoning required, completion date more than 2 years away, and heavily one-sided contract terms favoring the developer.
What happens if a developer delays or doesn't complete a BC presale project?▼
Developer delays are common in BC new construction. Buyer protections include: (1) Deposits must be held in trust by a lawyer or notary (REDMA requirement), so deposits are protected even if the project fails; (2) The disclosure statement must include an estimated completion date — if it changes significantly, buyers may have a right to rescind under REDMA; (3) If the developer cancels the project, deposits must be returned in full with interest. However, if a project is simply delayed (not cancelled), buyers typically have limited recourse and must wait for completion or negotiate with the developer.
Should buyers hire their own lawyer for a new construction purchase in BC?▼
Absolutely. Developer contracts are drafted entirely in the developer's favour. A BC real estate lawyer (not the developer's lawyer) should review the contract before signing — especially assignment clauses, completion date provisions, change order rights, what 'substantial completion' means, and dispute resolution mechanisms. The cost of legal review ($500–$1,500) is minimal compared to the purchase price and the risks in an unreviewed developer contract.
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