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Land deals
Key points
- An option agreement sets out the main terms and conditions between a buyer and a seller.
- The assignment of an option agreement is treated as a separate land transaction.
- Impact of the First-tier Tribunal decision in Landlinx.
- Significance of whether the option agreement forms part of the taxpayer’s trade or is an investment.
- The developer may assign their option interest to a third party.
Option agreements are frequently used in land transactions in particular when there is some speculation regarding the potential future value in respect of the underlying land for instance whether the land can be developed. Using options provides for flexibility or deferral regarding the timing of the land acquisition for the developer or house builder while giving the seller some certainty about the value they can realise and also the hope of an eventual land sale.
Whether an option agreement is the most suitable method by...
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