April 18, 2024

Business Bib

Business & Finance Blog

Can You Sell a Pre-Construction Condo before It’s Built

2 min read

Real estate investors are well aware of the term preconstruction condo flipping. This term is used to for selling purchase contracts for those units nobody have used or register. This is a much sought-after investment strategy and it is known to give high returns on investment. Unfortunately, people are also talking about it for the wrong reasons and because of misconceptions. In case you are pondering to flip a pre-construction condo, then you are supposed to understand the recent controversy. If you know the reason behind media attention than as an investor, you will be able to protect yourself.

Understanding preconstruction condo flipping

Yes, you can sell a preconstruction condominium in its development stage because it is not in existence yet. Now the pointed to understand is what you will sell. It is obvious that you will sell your contract, which you have signed with the builder. In this respect, the person who is purchasing your contract cannot negotiate. He is supposed to agree to those terms you have already accepted and the purchaser will have to pay the same deposit amount.

It is natural that the completion of a preconstruction condominium may take several years. During this period, if a buyer is shifted to another place or get married, then he may not be willing to move in to the same condominium for some reasons. For an investment purpose to get good return, selling a contract is very lucrative. You are more likely to get good return on your investment especially on Vaughan New Condos, property where values shoot up quickly.

Controversy

Last year preconstruction condominium flipping started making headlines in most of the news portals in Toronto and Vancouver. You can hear stories of different investors and sellers who have avoided paying the taxes. This was the reason why Canadian Revenue Agency started putting a close vigil on these cases.

As far as Ontario developers are concerned, they are not supposed to provide the details to the government about preconstruction flips. These are private transactions and the taxation rules are unclear to most of the sellers. The Canadian Revenue agency has found that the sale assignment was not properly handled and many assignors have to pay a large sum of money in taxes that was due from past sales. This is the reason why government is creating a database to help them track Vaughan New Condos flipping. They need to contain comprehensive information on every sale. This database can be shared with other state authorities.