Rick <sec4251[at]no.spam.yahoo.com> wrote:

- quote -

In the above paragraph, who is the "owner" and what taxes
has he been paying?

- quote -

The capital gains tax is separate from any other taxes
(property tax, etc.) on the house. It is a tax on the
difference between what the "now senior citizen" paid for
the house and what he received for it.

He will need an accountant who is versed in accounting for
rental real estate sold on lease-to-own terms to figure his
basis and his sale price.

If he has been treating the lease payments as straight
rental income all this time, figuring it out may be
especially difficult, because some part (not all) of those
payments was more like an installment purchase.

- quote -

What taxes on those monies do you think would offset the
capital gain?

If I buy an asset with after-tax dollars, I have a basis of
that amount in it, and when I sell, I owe capital gains on
the difference. But the party who sold it to me also owes
taxes on the difference between his basis and what he sold
it to me for. The fact that I made my payments with
after-tax money means nothing to his taxes.

This sounds like a mess, with lots of loose ends and income
that needs to be accounted for differently. You're going to
need an accountant who knows this kind of deal well.

--
Chris Green

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In principle, if a now senior citizen had been left a house
and used it for many years as a rental and now will pass the
title on to the couple who paid the lease payments for close
to 20 years.

And the owner has paid all the taxes on the full amount that
is being recognized as the present sales price or change of
title Lease to Buy amount - would the senior citizen, who
has not live in the house for many years, now be required to
pay Capital Gains taxes on the amount that has already had
taxes paid on it ?

Or would the capital gains tax aspect be a separate tax
issue and be calculated by the dollar amount of the total
lease payments ?

Or would all of the requisite taxes have been paid because
all of the monies for the "purchase" of the house have
already had taxes paid in the year of their receipt ?

Rick

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