Lease option (Rent to own) risk and tax questions

[Kenny Ye]

Happy Halloween BP members,

Have a couple of questions about Lease Option or rent to own, specially the ones related to sandwich lease options:

1. In the event the house is destroyed beyond repair, i.e burned down etc, do you refund the option fee to the tenant? What about the monthly rent credits?

2. What is a fair way of reporting the  positive cash flow in my tax return if I do not own the property?

Your thoughts?

Kenny