I am caught between a lease and a lease option. My accountant says I should not do a lease with option to buy becasue I will create a taxible situation. I have a possible tenant/buyer that is willing to pay up to $25,000 as a deposit to get the property. What should I do? I am in California
Still an open question - - can anyone assist?
What is the value of the house?
What does your accountant mean by a “taxible situation” exactly? I mean, if you lease a property, the rents you receive creates a taxible situation.
If he is referring to the option fee, it does not have to be included as income, and therefore not taxable, until either the option is exercised, or the option term expires.
Need more info for a better answer.
I would go with a lease option for about 18 months and raise the price to account for the appreciation in those 18 months. Take $20K in non-refundable option consideration with a decent rent credit.