What should investors know before buying a pre-construction condo in Markham?Pre-construction can work for investors with time and cash reserves, but the risks are different from resale. New condo buyers in Ontario get a 10-day cooling-off period after signing. Deposits are usually paid in stages before completion. Selling before closing through an assignment usually needs the builder’s consent and a fee, and since May 7, 2022 assignments of new homes are generally subject to 13% HST on the assignment price. Profit on a right held less than 365 days can be fully taxable under the federal flipping rule. At closing, expect adjustments beyond the price, and a lender appraisal that may come in lower than you paid.
Pre-construction condos and towns along Highway 7, in Markham Centre and in north Markham’s new communities attract many investors. The promise is buying today and benefiting from growth by the time the building is finished. The reality is a multi-year commitment with costs and risks that are easy to underestimate.
Michael John Lau, a REALTOR® with the Kaizen Real Estate Team, one of the most active real estate teams in Markham and York Region, reviews the numbers and the agreement terms with investors before they sign, including what happens if they need to sell before closing.
The timeline from signing to closing
| Stage | What happens |
|---|---|
| Signing | The agreement is signed and the first deposit is paid. New condo buyers have a 10-day cooling-off period. |
| Construction | Further deposits are paid on a schedule set in the agreement |
| Interim occupancy (condos) | The buyer may move in or rent before registration, paying an occupancy fee rather than a mortgage |
| Registration and final closing | The buyer pays the balance, closing adjustments and land transfer tax, and takes title |
Delays are common, so plan for a longer timeline than the brochure shows.
Deposits: plan for the full schedule
Pre-construction deposits are usually paid in instalments over months or years. Before signing, confirm the full schedule and make sure the money will be available when each payment is due. Ask how deposits are protected, for example in trust and under deposit insurance arrangements set out in the agreement. If you cannot close, you can lose your deposits and may face a claim for more.
Assignments: selling before closing
- Builder consent: most agreements require it, and many charge an assignment fee plus legal costs. Some restrict marketing or ban assignments until a certain stage.
- You may stay liable: consent usually does not release the original buyer unless the builder signs a release.
- HST: since May 7, 2022, an assignment of a new home is generally a taxable supply, with 13% HST in Ontario on the assignment price. The deposit portion can be excluded if the agreement states it in writing.
- The flipping rule: since January 1, 2023, profit on a right held less than 365 days can be taxed as fully taxable business income, unless a life event exception applies.
Assignments can be a useful exit, but they are rarely as simple or as profitable as expected. Speak with a lawyer and accountant first.
Considering a pre-construction purchase?
Michael John Lau can compare the project’s price with nearby resale and help you review the deposit schedule and exit options.
Book an investor consultationSearch Markham homesPrefer to talk? Call the Kaizen Real Estate Team at (647) 370-8885.
Closing costs investors underestimate
| Cost | What to check in the agreement |
|---|---|
| Development charge increases | Whether increases can be passed on, and any cap |
| Utility connections and meters | Fixed amounts or uncapped charges |
| Tarion enrolment and other fees | Who pays and how much |
| HST and the new housing rebate | Whether the price includes HST and assumes you assign the rebate to the builder; investors who rent may need to apply separately |
| Land transfer tax | Paid on final closing |
Ask your lawyer to estimate total closing adjustments before you sign, not just before you close.
The appraisal and financing risk
Your mortgage is arranged near completion, not at signing. If the market has softened, the lender’s appraisal may come in below your purchase price, and you must cover the difference. Rates and lending rules may also have changed. In September 2026, Markham condo apartments averaged $574,612 on resale, according to TRREB, and GTA condo apartment prices were down 7.7% year over year. Compare your price with resale prices in finished buildings nearby. For more, see pre-construction vs. resale in Markham.
Running the investor numbers
- Estimate rent for a similar finished unit nearby, not the developer’s projection.
- Subtract condo fees, property tax, insurance, vacancy and a repair reserve.
- Test the mortgage at a rate higher than today’s.
- Add closing costs and any appraisal gap to the cash you will need.
- Decide whether you can carry negative cash flow if rents fall short.
Who pre-construction suits
Pre-construction tends to suit investors with stable income, enough cash for the full deposit schedule and closing costs, a long time horizon and a plan to hold after completion. It is riskier for buyers relying on an assignment profit, on rising prices, or on qualifying for a mortgage they have not tested. Ultimately, the decision is yours. The goal is to make sure you have all the information before you sign.
In pre-construction, the details in the agreement matter as much as the floor plan. Call the Kaizen Real Estate Team at (647) 370-8885 or book a consultation.
Frequently asked questions
Is there a cooling-off period for pre-construction condos in Ontario?
Yes. Buyers of new condos have a 10-day cooling-off period after signing the agreement or receiving the disclosure statement, whichever is later.
Do I pay HST on a pre-construction assignment?
Since May 7, 2022, assignments of new homes are generally subject to 13% HST in Ontario on the assignment price. The deposit portion can be excluded if it is stated in writing.
Can I sell my pre-construction condo before closing?
Often, through an assignment, if the builder consents. Builders usually charge a fee, and you may stay liable if the buyer does not close.
Does the flipping rule apply to assignments?
Yes. Profit on a right to buy a home held less than 365 days can be taxed as fully taxable business income unless a life event exception applies.
What closing costs come with pre-construction?
Development charge increases, utility connection fees, Tarion enrolment and other adjustments, plus land transfer tax. Check caps in the agreement.
What happens if the condo appraises low at closing?
The lender will usually lend on the lower value, and you must make up the difference with more cash or other financing.
Michael John Lau and Neeraj Moolchandani are licensed REALTORS® with the Kaizen Real Estate Team, eXp Realty, Brokerage, 9763 Markham Rd, Markham, ON L6E 1A4. Licence #4784577. Call (647) 370-8885. Assignment, HST and flipping rule details are from Nihang Law (October 7, 2026) and the CRA. Prices are from TRREB’s September 2026 Market Watch. Every builder agreement is different; have a lawyer review it during the cooling-off period. This article is general information only and is not financial, legal or tax advice. Not intended to solicit buyers or sellers currently under contract with another brokerage.
