Margaret CPA in OH Posted October 18, 2016 Report Share Posted October 18, 2016 Client has informed me that the LLC formed recently has a rented property that they want to sell to tenant. I don't yet have a copy of the contract but info sent shows $3000 as down payment on lease option and it appears as though an additional $380 monthly over the previous rent will be payments. I looked up basic info on accounting for this, seems fairly straightforward but is there anything I should look out for? Maybe specific questions will bubble up when I get the contract and I'm in no real hurry. I'm leaving for Australia and Papua New Guinea next week for a month of scuba diving. They didn't get their final data for 2015 to me until last Wednesday. It seems they are ahead already this year! Quote Link to comment Share on other sites More sharing options...
Max W Posted October 19, 2016 Report Share Posted October 19, 2016 This article may help. http://www.fishercpafirm.com/blog/174-tax-treatment-of-real-estate-lease-options-houston-real-estate-cpa.html The last item can be a problem, so the lease-to-own period should be no more than two to three years. There may be state specific laws to consider as to this. Quote Link to comment Share on other sites More sharing options...
Margaret CPA in OH Posted October 19, 2016 Author Report Share Posted October 19, 2016 Thanks so much, Max! Once I get the contract, I will do more in depth research, especially for this state - thanks for that tip. My CPA license gets renewed end of this year for 3 more so I've definitely decided on just 3 more tax seasons with NO extensions for tax year 2018. The trusts on which I am trustee will be fully distributed that fall, yippee! I'll be 73 then so enough but it's not too late to learn new things as long as it isn't too hard and I have this great group here. 2 Quote Link to comment Share on other sites More sharing options...
Lee B Posted October 19, 2016 Report Share Posted October 19, 2016 I had a somewhat similar situation with a client several years ago. In my case, the tenant was unable to obtain financing and ended up forfeiting the the deposit plus the payments above and beyond the monthly lease payment. Quote Link to comment Share on other sites More sharing options...
Margaret CPA in OH Posted October 19, 2016 Author Report Share Posted October 19, 2016 I still haven't received the contract and won't really get into this until end of November but did you take the deposit into income at the time the tenant gave up? From what I know of the current tenants with several late payments, it wouldn't surprise me that the same thing happens here. Quote Link to comment Share on other sites More sharing options...
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