[WSBARP] Option payment when applied to downpayment

Wed Apr 16 07:59:36 PDT 2014

A further note: option money is usually paid immediately to the seller,
and is used, not held. If the sale is in a different tax year than the
option payment, then the seller can take it into income for tax purposes
when paid, or defer doing so and take it into income for tax purposes when
the deal closes. But if seller defers and the deal doesn’t close, then
seller risks being penalized for not taking it into income in the year it
was paid. Or at least that’s how I understand it. Tax folks feel free to
comment. 

Rebecca K. Wiess

Attorney at Law

1420 5th Avenue, Suite 3775

Seattle, WA  98101

Phone 206 622-4425

Fax 206 622-9021

rwiess at foxinternet.net 

  _____  

From: wsbarp-owner at lists.wsbarppt.com
[mailto:wsbarp-owner at lists.wsbarppt.com] On Behalf Of Rich Holland
Sent: Tuesday, April 15, 2014 10:52 AM
To: wsbarp at lists.wsbarppt.com
Subject: RE: [WSBARP] Option payment when applied to downpayment

Practically speaking it is better for the ‘buyer’ to have it count as part
of the down payment so they don’t have to come up with the Option money
PLUS whatever the bank requires as a down payment at escrow.  They want to
have that option payment counted as part of that amount rather than
reducing the purchase price of the house (which reduces the loan amount
potentially).  In either case the money is almost always completely
non-refundable barring Seller default and almost always immediately
released to the seller.

Thanks,

Rich Holland

From: wsbarp-owner at lists.wsbarppt.com
[mailto:wsbarp-owner at lists.wsbarppt.com] On Behalf Of Craig Blackmon
Sent: Tuesday, April 15, 2014 10:42 AM
To: wsbarp at lists.wsbarppt.com
Subject: [WSBARP] Option payment when applied to downpayment

Listmates, I’ve made the tactical decision to ask the proverbial “dumb
question” for a quick answer rather than investing the time to figure it
out myself.  Thanks for your tolerance in this regard…

Generally speaking (and consistent with MLS forms) some or all of the
consideration paid for an option can be applied either to the down payment
or to the purchase price at closing.  Practically speaking, what’s the
difference?  If down payment, must the funds be held in escrow, and/or
actually deposited into escrow by the seller prior to closing?  And if to
purchaser price, can it simply be a credit on the settlement statement,
such that the seller can consume the funds in the meantime?  That’s my
assumption…

Thanks again.

Craig

Craig Blackmon

Of Counsel Attorney at Law

 <http://lawhg.net/> Holmquist & Gardiner, PLLC

1000 2nd Avenue, Suite 1770 Seattle, WA  98104

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As with all lists - let the reader beware! No warranties or
representations are made as to the accuracy of any information provided.
All opinions and comments in this message represent the views of the
author and do not necessarily have the endorsement of the Washington State
Bar Association nor its officers or agents. 

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the following in the body of the message: unsubscribe wsbarp - OR - send a
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Information provided on this list should not be considered legal advice.
As with all lists - let the reader beware! No warranties or
representations are made as to the accuracy of any information provided.
All opinions and comments in this message represent the views of the
author and do not necessarily have the endorsement of the Washington State
Bar Association nor its officers or agents. 

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