baldeagle 0 Report post Posted February 15, 2004 are leases not treated as installment sales for tax purposes? reply to dan093045@yahoo.com Share this post Link to post Share on other sites
Dave T 0 Report post Posted February 15, 2004 No. Leases are leases. Income from your lease is ordinary income. In most cases when you follow Michael's lease option strategy, installment sale tax treatment will not apply because you are not selling with "owner" financing. Instead your tenant-buyer obtains new financing to purchase the property when he exercises his option. There is no installment sale involved. In the rare instance when you do agree to carry back financing, your investment strategy and business practice will dictate whether installment sale tax treatment applies. If you are selling your own investment property that you have used as a rental for some years, then installment sale tax treatment can apply. On the other hand, when you are in a sandwich lease or you are using lease option techniques to facilitate a quick sale for property you have recently purchased, then installment sale tax treatment will not apply even if seller financing is a component of the deal. Share this post Link to post Share on other sites
