This article investigates the design of property taxation both before and after development in a real options framework where a fixed number of landowners irreversibly develop property in an uncertain environment. We assume that densely developed properties reduce open space, and thereby harm urban residents. However, landowners will ignore this negative externality, and will thus develop properties more densely than is socially optimal. The regulator can correct this tendency by imposing taxation on property both before and after development. It is, however, unclear whether the latter should be taxed at a higher rate than the former even though the negative externality arises only after the property is developed.