Supply of an Option to Purchase Real (or Immovable) Property
An option to purchase real property gives the holder of the option the right to require the owner of the property to sell the property by the deadline and according to the price and other terms set forth in the option agreement. If the holder exercises the option according to the terms of the contract, the owner must conclude a sales contract for the real property.
For the purposes of the GST and QST, the supply of an option to purchase real property is considered a supply of intangible personal property (or incorporeal movable property). According to the place of supply rules, the supply of an option to purchase real property is deemed to be made in Québec if the real property covered by the option is situated in Canada, primarily in Québec. In this case, the GST and QST apply to the consideration for the supply of the option.
For more information, see GST/HST technical information bulletin B-103, Harmonized Sales Tax: Place of supply rules for determining whether a supply is made in a province, and GST/HST memorandum 19.5, Land and Associated Real Property.