Lease Option taxes - Posted by joel

Posted by joel on March 18, 1999 at 01:05:52:

I’m fairly new at this, so these questions might sound a little ridiculous…but, I would appreciate any input.

(Q-#1) In the case of a L/O in which the seller agrees to a 50% rent
credit, does the seller pay taxes on the full rent they are receiving or just
the part that is not credited.

For example, Seller is lease optioning property for $500/mo with
$250/mo creadit toward the purchase price. Will the seller be taxed for
the $6,000 they receive in income from that property in that year, or will
they just be taxed for just the $3,000 that is not being credited?

(Q-#2) If a seller has a property on the market for $65,000 and buyer
agrees to pay the full price at 0% plus a premium of $15,000 =
$80,000…will the seller have to pay an income tax since he technically
isn’t earning interest on the property?

(Q-#3) Is there any way in which the previous scenario might be
considered illegal?