Question
My home has been on the market for about six months. I have had no serious offers.
I do have one interested person who wants to know if I will give him a two-year lease with an option to buy. I’m still looking into this, but before I commit to anything, can you let me know if there are tax issues I need to worry about?
Answer
You don’t need to worry.
In the right circumstances, a lease-option could work very well for you because it gives you three sources of income:
1.
Income from the granting of the option
2.
Income from the rent
3.
Income from the sale of the home (if the optionee-tenant decides to exercise the option to buy)
This makes your tax situation juicier than a traditional sale, because each type of income has a different tax treatment.
How the Option Works
An option is a contract to keep an offer open for a set period of time. ... Log in to view full article.
