Your Guide to Option Agreements

A put and call option agreement is a contract where one party agrees to sell one or more properties if requested by the buyer (a call option) and the other party agrees to buy the same property if requested by the seller (a put option).

In practice, the call option runs for an agreed period of time giving the buyer the opportunity to buy the property by giving notice during that call option period. Once the call option period has expired, the seller then has the opportunity to force the buyer to buy the property by giving notice during the agreed put option period.

The primary benefit of using a put and call option agreement rather than a normal contract of sale is the potential tax benefits. By using a put and call option agreement, you can:

1 delay the buyer’s obligation to pay transfer duty;

2 nominate another buyer to buy the property without paying transfer duty twice; and

3 change the period in which the property is sold for tax purposes which can impact on the tax obligations of the seller (primarily capital gains tax).

McAndrew Law are experts in option agreements so feel free to get in touch if you have any further questions or if you are looking for a Queensland based law firm experienced in option agreements.

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