Q: I am 71 and own two rental properties that help us with our retirement. It is becoming hard for me to keep the properties up. I was thinking of doing a long-term lease with an option to buy, perhaps for 10 to 12 years.
I could give the renter a credit of $200.00 per month and they would also be responsible for any maintenance needed during that time period. At the end of the 10 to 12 years, they would purchase the home.
I’d have income for the next decade or so and won’t have to pay capital gains tax until we close. Am I missing something?
A: I wouldn’t do a 10-year lease with an option to buy because it’s too long a time period. So much can happen to you or your family over a decade.
Instead, consider doing a 2-year lease with an option and make the option renewable. If something happens, and you need the cash in a lump sum, you’ll have more flexibility. You can still offer the tenant a larger rent credit in exchange for doing the maintenance on the property, especially if this will make it easier on you.
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