Re: How do I sell my rehab house? - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on August 19, 2003 at 08:11:08:
Bat Pro 99-------------------------
There have been many books written on this topic. I’d suggest you get down to the local public library and see if they don’t have a couple you can read. If not, they can order them through interlibrary loan.
Or go to a major bookstore, if there is one where you live. Either new or used, it does not matter, there are always these types of books for sale.
Or go on the online booksellers such as amazon dot com and order a couple of the books.
I am not enthusiastic about you selling the house on a lease with option, although other people may disagree. Two main reasons: you don’t get a payday for a long time and you are taking a risk that the property will decline in value, the optionee/leasee with back out and then you have to start over where you are now. Of course, should the property go up in value, your optionee/leasee is likely to exercise the option. So, heads you lose, tails the other party wins. There is also some issue with taxation and lease-options. Jack Reed makes the argument that a lease-option is really structured like a contract for deed (land contract, contract of sale in different states) and thus, the IRS might so recharacterize it. If that were so, the beginning point for your lease-option is considered the sale date for the property. You also cannot treat the sale as an installment sale. You are required to pay the ordinary income tax on all of the gain in the tax year of the sale. However, you would not have gotten all of the sale price in the year. Thus, you might well have to pay part of the tax bill with other money you have–or might not have? Even Jack admits that the likelihood of this happening is low. However, it is a possibility. And with all the lease-option deals going down, one has to worry about the IRS picking up on it and aggressively going after the taxes and penalties, I would think.
Good Investing************Ron Starr***************