Lease Option My House - Posted by scarolan

Posted by scarolan on April 16, 2005 at 07:04:34:

From what I understand, if you have not lived in the home 2 of the last 5 years then you do pay a capital gains tax.

My particular prepayment penalty is on a second mortgage, which lasts for three years. I should have clarified that point - after this lease option is over (12 months) I will be outside the 3 year window.

Anyone have suggestions or answers to my original questions?

Lease Option My House - Posted by scarolan

Posted by scarolan on April 15, 2005 at 10:49:11:

Greetings friends:

I’m planning to move out of my house into something smaller, and sell it via a lease option. Here are a couple of questions that maybe you can help me with:

  • Option fee - I have seen some contracts that apply this towards the down payment, and some that apply it toward the purchase price. What is the best way to handle this?

  • Rent discounts - How would you apply a rent discount to someone’s option fee? I suppose I could do something like reduce the option fee by X, and offer a monthly discount of X/12 for rent paid on time? How do you all do this?

  • Separate contracts - I have one contract for the option, and the other as a standard rental agreement. Should I tack on a security deposit in addition to the option fee? What would be the reason or circumstance where you’d do this?

  • Terms - how long should the option last? I’m thinking about 12 months. After 12 mos, I’m free of any prepayment penalties or capital gains tax on the sale of the home.

  • Any other snafus or red flags you can warn me about ahead of time when doing a lease option?



Re: Lease Option My House - Posted by sandie

Posted by sandie on April 15, 2005 at 21:38:13:

Scarolan or if someone knows could answer,
If you sell a home on a lease option, you do not have to pay prepayment penalties or capital gain taxes,
is that correct? What are the rules?
Thank You,