Why It’s Attractive to Buy Assignments from Pre-Sales Purchased Three to Four Years Ago
In today’s evolving real estate market, many buyers are finding that purchasing assignment sales—contracts for properties bought off-plan years ago—offers significant advantages. With changing tax laws, rising interest rates, and shifting investor strategies, the market is ripe for opportunities to buy assignments. Here’s why buyers should act now and seize these assignment deals:
1. Favorable Pricing: Deals Below Original Cost
Over the last few years, the cost of borrowing has dramatically increased, with mortgage rates more than doubling. This has made it challenging for original buyers who purchased pre-sale contracts three to four years ago to complete their transactions. Many of these investors are now looking to sell their contracts, often at prices lower than their original purchase cost. This creates a rare opportunity for buyers to buy assignments below market value, giving them an advantage in a market where real estate prices typically rise over time.
This window is unique and short-lived. Once market conditions stabilize and interest rates normalize, assignment sales will likely return to their typical premium pricing. Buyers who act now can benefit from both reduced purchase prices and potential future property appreciation. Therefore, it’s a smart move to buy assignments now.
2. Federal and Provincial Tax Changes Pressuring Investors to Sell
Recent tax policy changes at both the federal and provincial levels are motivating many real estate investors to liquidate their holdings. These policies make it more expensive to hold onto investment properties, providing more opportunities for buyers to buy assignments.
- Federal Anti-Flipping Tax: Introduced in 2023, this tax targets investors selling properties within 12 months, taxing profits as business income rather than capital gains. This change discourages short-term property investments and has led to a wave of assignment sales as investors look to avoid hefty tax bills(EY US,EY US).
- Stricter Trust Reporting Requirements: Many investors hold properties through trusts for tax benefits. However, the new federal rules have introduced complex reporting requirements that make this structure less attractive. Investors are now opting to sell these properties rather than deal with the increased administrative and financial burden(Home).
- Provincial Taxes in British Columbia: In addition to federal tax changes, British Columbia has continued to implement policies that discourage speculation and holding vacant properties. The Speculation and Vacancy Tax, along with increased property transfer taxes, has pushed investors to sell rather than hold onto properties. These policies have created a larger supply of assignments for buyers to buy assignments(EY US,Thor).
3. Investor Motivation: Rising Carrying Costs and Financial Pressures
The rapid rise in mortgage rates has also increased the financial strain on real estate investors. Many who bought pre-sales three to four years ago are now finding that their expected rental income no longer covers their mortgage payments. Additionally, personal financial pressures due to rising interest rates on their own mortgages are leading investors to liquidate their pre-sale contracts. Thus, many are keen to buy assignments due to these financial pressures.
This financial squeeze is prompting a large number of assignment sales, with sellers eager to transfer contracts at attractive prices. Buyers who capitalize on these deals now can secure valuable properties without the added burden of the high interest rates that new buyers face today.
Why Act Now?
With assignment deals being offered at below-cost prices, changing tax laws pushing investors to sell, and financial pressures increasing the motivation to liquidate, this is a prime time for savvy buyers to enter the market. As conditions evolve, these opportunities won’t last long. Buyers who act now can secure a property at a lower price and benefit from long-term gains once the market stabilizes. Therefore, buy assignments while the market conditions are favorable.
Take Action Today: Contact us to explore current assignment opportunities and find out how you can benefit from this unique market dynamic. Now is the time to buy assignments and capitalize on these advantages.
