LEASE OPTION TAXES - Posted by JASON


#1

Posted by Brad Crouch on February 22, 1999 at 19:25:54:

Jason,

Who received the cashflow of $100 per month ($1,200 per year)? If it was you, wasn’t this income?

Why would the fact that you are not the owner of record, cause you to not pay taxes on income earned?

Invest the money in repairs so you can have a deduction or put the money in your pocket and bite the bullet.

Brad


#2

LEASE OPTION TAXES - Posted by JASON

Posted by JASON on February 22, 1999 at 11:18:05:

Quick Question:

Does the government require you to pay an income tax on a property that you are Lease Optioning and subletting to another tenant for a premium?

For example, if you have an agreement with the owner of the property to pay $600/mo. with a 50% rent credit and in turn are subletting the property to someone else for $700/mo…are you required to pay an income tax on that property for the extra $100 you pocket. If so, being that you don’t own the property, is there any legal way around it?

Jason


#3

The legal way around it. - Posted by Bud Branstetter

Posted by Bud Branstetter on February 23, 1999 at 11:05:25:

Do the deal in a Roth IRA and you will not have to pay income taxes.

The Catch

As all good things you have to wait to be able to spend it. The compensating factor is that you can use it to reinvest and grow tax free. As a lease option there is likely a larger back end when the option is exercised. Do a couple of those and you have the cash to invest as rehab or buy with all cash at large discounts.