Joint Development Agreements

Under a joint development agreement, land owner contributes his land and enters into an arrangement with the developer to develop and construct a real estate project at the developer's cost. Thus, land is contributed by the land owner and the cost of development and construction is incurred by the developer. The land owner may get consideration in the form of either percentage of sales revenue or certain percentage of constructed area in the project, depending upon the terms and conditions agreed upon between them.

In the case of joint development arrangement of real estate, significant income tax issues may emerge which have serious bearing of the tax liability on the owner of land as well as on the developer of the project.