How to file taxes on a sandwich lease option

[Curt Smith]

Hi Guys, I searched BP for tax prep help, didn't find any tax prep helps for a sandwitch lease option.

Bought on a lease and option.  Zero option fee, lease is the sellers mortgage payment:  $798/mo.  I pay for fix ups.   

In 2014 about $4k in fix ups and did not rent on a lease and option till early 2015.  

Just guessing and figure I'm way off.  I use TurboTax by the way.

- New rental in Rental / Royalty section.  I have 10 other std rentals.

- purchase price = zero

- cost basis is stepped up by the 2014 fix ups pre renting.

- I may have paid one lease payment to the seller.  I don't know where to put this number?

This is all I need to get punched in for 2014.

In 2015 taxes:

- I took a $2.5k option fee.  I heard this is a non-taxable event since it's early sale money, that is handled at the actual sale date.  If no sale guessing it's income but at option expiration.

- I'm getting $925/mo rent but paying $798 to the owners.  Need to handle this?  Out of ignorance and guessing, I'd subtract the two and just file actual rent is the difference...  :)

- Had more fix up expenses in 2015 prior to renting.  I figure I'd add them as depreciated items.  New bathroom and electrical fixtures and painting.  I forget the depreciatoin period for a paint job?

tnx!