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Greg
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L/O Tax questions
Monday, March 17 2008 07:28 AM
It is my understanding that buying with a long term lease option, such as 5 years, that I control the property appreciation (with the option) and the profits and use (with the lease). As such, for tax purposes, I own the property and therefore can take depreciation and other tax benefits. I wouldn't give the party I am buying from any tax advice since I am not a CPA, so I can't control whether or not they take depreciation for leasing the property to me. Am I incorrect in this assumption that I may take the tax benefits?
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Randy Hughes
SFH Master Advisor
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Re:L/O Tax questions
Wednesday, May 28 2008 12:26 PM
Greg,
Sorry for the delay in answering your question, we have had a problem with our Discussion Forum.
Yes, you are correct in your thinking. However, the IRS also looks to who is paying the taxes and insurance when determining is a "sale" has in fact occurred. Also, as you stated, it must be a long term lease situation to be deemed a "sale."
Randy Hughes
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Greg
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Re:Re:L/O Tax questions
Wednesday, May 28 2008 12:47 PM
Thanks Randy. Welcome back.
Is 5 years long enough in that case?
I guess it seems that if you have a reasonable case that you could convince an IRS agent that a sale occurred even if the previous owners are paying taxes and insurance. This seems to be one of those one in a million type of things. But, I find that quite a few people come up with these type of scenarios to protest a deal, even though the likelyhood of getting struck by lightning is greater.
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Randy Hughes
SFH Master Advisor
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Re:Re:Re:L/O Tax questions
Wednesday, May 28 2008 02:27 PM
I agree 100%
Randy Hughes
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Marty
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Re:Re:L/O Tax questions
Friday, May 30 2008 07:06 PM
Randy,
I'm in the process of learning the "Lease Option" subject which I found to be very exiting!
Going back to the previous question that Greg made, I would like to see if you could help me out with a couple of questions regarding the long term lease options.
1-Let's say I find a good deal but the owner has not lived in this house for more than two years out of the last five(which would make the withholding tax law applicable) being recognized as an investment property by
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Marty
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Re:Re:Re:Re:L/O Tax questions
Friday, May 30 2008 07:22 PM
Back to my questions: 1-Will the owner of an investment property have an advantage by selling on a lease option? Will he be liable for capital gain taxes, or can a 1031 be executed at the time the buyer exercises the option? 2-If the LO is for 5 years or more, will the Seller be required to file IRS form 6252 and if so, will this prevent the buyer from getting interest payment tax credit? 3-Is filing of the 6252 required by the owner of both investment or personal residence or does it applies only to investment property?
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