Lease option … or sale? It matters to the IRS

Description

Abstract: Quite often, lease options are used in real estate transactions, when property owners run into difficulty finding a suitable buyer. A lease option is a traditional lease with a purchase option that gives the tenant the exclusive right to buy the property at the price typically set from the beginning. But, the IRS might recharacterize the arrangement as a sale in the form of a contract for deed. This article explains how lease options work.