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A client that has rental property income sold a rental home as a rent-to-own. Where do I report the income and expenses?
Best Answer Click here
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Sounds like a "Land Contract" agreement.
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Sounds like a land contract to me also, if it is then your client sold his rental property on the installment method. see this link to get you started: https://www.irs.gov/taxtopics/tc705
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@Terry53029 thanks for the link information...
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Depends on the facts and circumstances.
https://www.ccim.com/cire-magazine/articles/lease-option-or-installment-sale/
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Thanks, I think so too.
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Thanks for the link, I'll use it. This sale is for 2021. Just checking my options.
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Thank you for the info and link. I've printed it and will use it properly more than once. Thanks, again
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I don't think the term "land contract" is even used in most states. The concept is always available, though, under different names. But the "rent to own" schemes I have seen are usually just rentals, with enough of an option for the tenant to buy that it will keep the place from sitting vacant. Once the tenant moves in and finds all the flaws, they decide to look elsewhere -- the grass is always greener, in some other yard. These days I'm surprised that a landlord would consider offering a purchase option, because tenants are already lined up (in most places) looking for a place to live, and the real estate market doesn't show much sign of cooling off.
Anyway, don't get hurt from others taking a stab in the dark on telling you what this is.
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@BobKamman In WI land contracts are common, as well as rent to own. A land contract carries purchase obligations as the buyer had already committed into a financing agreement for the full purchase. On the other hand, a rent to own contract involves less obligations whereby the buyer has the option, but is not obligated to buy the property after the contract period.
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I know that.
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I agree, Thanks
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Thanks, I'll take that into consideration.
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You said that you did not think land contracts were used in most states, Nice that you know what goes on in most states. I'm lucky to keep up on my state of WI. 😁