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Kobell

It is a good way of buying any property that you plan to onsell rather than settle on. You get to control it without owning it. It’s sort of like the yanks ‘and/or assigns’.

How it works is like this:

There is a standard contract of sale, but this is not signed, therefore not exchanged, and no stamp duty etc. Attached to this is the option contract. It’s actually a combination of two options in the one. A call option which gives you (or somebody you sell it to) the right to buy at x dollars at x time in the future. The Put option gives the seller the right to sell to you at x dollars at x time in the future.

You could both agree not to execute the contract, but I’ve found this is an unlikely scenario. Basically, it will have to be sold/purchased. The option contract should also set out when the ‘real’ contracts of sale need to be exchanged. Up until this point, you can sell the entire contract to somebody else, who will then sign the contract of sale, and pay the price you agreed with the seller. Your profit will come in the amount you are paid for the option – kind of like a finder’s fee.

Cheers
Mel

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Thanks for the eplanation Mel i appreciate your time
Does this negate the payment of stmp duty by me totally or do i have to pay it on the amount i get for the option Also i guess this is not subject to any CGT/Would it not be a good way to purchase property even if i chose to settle as i under stand that on a signed contract stamp duty is payable 3 months or 6 months into the term even though the settlement could still be another 6 months or so
Again Mel thanks