Put and call options have been around for many years but are becoming increasingly popular in recent times. This is due to an influx of infrastructure being built in many Australian metropolitan areas.
Put and call options are avoided by property investors due to their complex and sophisticated nature. They are powerful tools in property investment and development, but their improper use may result in problems.
Our property experts at Bolt & Hunter have extensive experience in dealing with put and call options. In this article, we discuss what they are, how they can benefit you and why it's beneficial to have property purchasing professionals like us on your side.
Put and call options provide the buyer, with the right but not the obligation to purchase a property at an agreed price (a call option). They also provide the seller with the right, but not the obligation to sell the property at an agreed price (a put option).
Generally, put and call options run consecutively, for an agreed period. Each party can give notice of their intention to buy or sell during their option period. Should neither party exercise their option, the agreement ceases, and the property remains unsold.
Put and call options may provide benefits to both the buyer and seller. Below are the two major ways in which put and call options can benefit you, the buyer.
Put and call options allow you to buy yourself some time. If you're a property investor wishing to develop or redevelop a property, you're going to want to do your due diligence first.
Making your enquiries takes time, during which another party may nab the site from right under your nose. With put and call options in place, you can 'hold' the right to the property at an agreed price, for an established timeframe. And the best part is, it's free of any obligation to purchase the property at the end of the option term.
A carefully drafted option agreement can result in tax benefits. For example, you may have the option to defer your tax or duty liabilities to a more convenient time or closer to settlement. Essentially, put and call options allow you the flexibility and confidence to commit to a property purchase without needing to incur any immediate tax associated costs.
Put and call option agreements may, in specific cases, have additional benefits in comparison to a stand-alone sale contract. They do, however, present a range of tax and legal issues that need careful consideration.
If you're wanting to develop property, an option agreement may be the right choice for you. Bolt & Hunter have extensive expertise and experience, giving you peace of mind surrounding your option agreement.
Bolt & Hunter have successfully been able to secure sought-after development sites for our clients through put and call options. These include several types of developments ranging from $400,000 to $100,000,000, + such as:
Our team of professionals provide quality, personalised service and can support you through every step of the process. Having Bolt & Hunter on your side means the heavy lifting is done for you. We take care of everything, including:
At Bolt & Hunter, we're driven by your success. We pride ourselves on being able to offer you a comprehensive, A - Z service designed to guide you on your journey to wealth creation through property. Contact us today to see how we can help you.