Tax Law (Questions About Taxes)/lease-option


I would like to know my tax ramification upon the sale of my home which is lease-optioned for 2 years.
I have lived in the home since 1995, now I am having someone lease it for 2 years before we close on the sale in 2015. The sale price is (and will be) $132,000 and I will have a balance of $58,000 when we close in two years.  I will see a gain of $74,000.  Will I be taxed on that gain as if it were an investment property because of the lease-option?  I have worked for that equity while I lived here as my primary residence....except for the 2 years of course.  So what is my tax ramification on the gain at closing?
Thanks, Rob


Thanks for your question.

A lot depends on the terms of the lease/purchase option but since you will be leasing it for two years, you still fall within the requirements that you live in the house for two years of the most recent five year period.  However, you will have to pro-rate the amount of exclusion based upon the time it was a principal residence and the time is was a rental unit.

Hope this helps.

John Stancil, CPA

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John Stancil, CPA


I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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