Contract For A Lease And A Manadatory Purchase
I am looking for help in preparing a lease/purchase contract for a residential home. I need it worded as a lease/option with the tenant getting monthly credit form their rent payment that is amortized over the term of the lease.
Basically I need a contract that reads like a lease but is a contract for deed. I am looking for the best of both worlds. Does anything like this exist?
I am not looking for any one to just give this to me. I am willing to buy a well written and verified contract.....not looking to just be spoon feed!
[ Edited by mewalker0 on Date 04/06/2006 ]
look under Lease Option Kings profile....regards, CWal
Does anyone know the LeaseOptionKing’s email address? I would like to ask him some questions before I purchase his contracts.
mewalker0,
If you find what you are looking for and use it to put a buyer in your property, you will have accomplished an installment sale in the eyes of the IRS. Even though you may call it a lease purchase, the IRS will call it a disguised sale.
If this sale is also deemed to be a dealer disposition, then all of your realized AND unrealized profit on the deal is taxable as ordinary self-employment income in the year of the sale.
Quote:
On 2006-04-07 19:25, NewKidInTown3 wrote:
mewalker0,
If you find what you are looking for and use it to put a buyer in your property, you will have accomplished an installment sale in the eyes of the IRS. Even though you may call it a lease purchase, the IRS will call it a disguised sale.
If this sale is also deemed to be a dealer disposition, then all of your realized AND unrealized profit on the deal is taxable as ordinary self-employment income in the year of the sale.
Does that also apply to a lease purchase that gives partial rent credit? How can you word a lease purchase and not have the IRS call it a sale? Thanks in advance.[ Edited by mewalker0 on Date 04/08/2006 ]
Thanks for the quick answer. I do own the property and the tenant has always paid the rent on time and takes great care of the property. He approached me a couple weeks ago and asks if I would sell him the property and carry the note. He has filled bankrupt and can not qualify for a loan. I have no doubt he will make the payments but after reading some of the nightmare stories about "contract for deed" evictions I was looking into the lease purchase option. I didn’t know if there was a way to make a deal using the lease purchase option that would allow me to carry the note order a period of years and give the tenant a partial credit of the rent until the house has been paid off.
LeaseOptionKing...Do any of your lease contracts allow for what I am lookinf for?[ Edited by mewalker0 on Date 04/08/2006 ]
Why not just use a Lease and an Option? Give a reasonable amount of rental credit (that the T/B loses each month that the rent is late). As long as you keep it under 50 percent, you should be okay. After a year of paying on time, some lenders will treat it as a refi and make the loan despite the bankruptcy. When was the bankruptcy filed? Some lenders want to wait two years into a bankruptcy.
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"A deal is only as good as the quality of your Contracts." --Me[ Edited by LeaseOptionKing on Date 04/08/2006 ]
Are you getting any money in consideration (down)?
[addsig]
yes....$50,000 sale price and $2500 down. He wanted me to carry the loan over a 15 year term. I would like to carry it for 5 years and give him the opportunity to get a loan. If he fails to get a loan I would extend the lease on a yearly basis calculating the rent and the rent credit based on the prime rate....an ARM but in the language of a lease not a sale.