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Lease Option And Rental Income

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  • Tuesday, May 10, 2005 @ 09:31 PM EDT
  • 3 Comments
Say you buy a home, where you monthly mortgage payment, including Taxes and Insurance is $1500/mo. You then lease this home on an option to buy, with $5000 option consideration. Your lease is $1600/mo with $300/mo credit. Now, what is your income? Is it the difference between 1600 and 1500 (or 100/mo or $1200/year) or is it full $1600/mo (or 19200/yr)? Also, is $5000 option considered part of the income for tax (IRS) purposes? Thanks, vk
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  • LeaseOptionKing
    LeaseOptionKing10th May, 2005
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    Your income is the full amount of rent from which you would subtract deductions and depreciation. The $5,000 is not income until the the year in which the Option is exercised or defaulted.
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  • JRendell
    JRendell6th May, 2005
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    Thanks Maddog56. I will look into this.

  • LeaseOptionKing
    LeaseOptionKing10th May, 2005
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    Your Option should clearly spell out the terms of the sale IF exercised. With good paperwork, you do not need a separate Sales Contract.
    [addsig]

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