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Seller messed up advertising on house and needs few more months to bring few things up to code before he can sell. Hence as alternative solution seller is offering to rent out home to prospective buyer with an option to buy it once all issues are resolved.

What would be:

  1. cost basis for purpose of calculating gains once home buyer will resell home? Would it be one time premium + rent collected + strike price of home?
  2. tax basis for property tax purposes in California? would it be strike price or one time premium + rent collected + strike price of home
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  • how much of the monthly rent is being credited to the sale transaction? What is the one time premium? and when does the buyer pay that premium? do they get it back if they don't exercise the option?
    – mhoran_psprep
    Sep 5, 2020 at 11:38
  • Has the buyer considered all the risks? what happens if the seller doesn't make the repairs quickly? what happens if the market changes? Can the seller rent the property if they can't sell the property?
    – mhoran_psprep
    Sep 5, 2020 at 11:40

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