I am working on purchasing a 700sq/ft cottage (second home) that I believe fair market value is ~$210K-$230K, however, the buyer bought it in 2021 for $225K (and put about $15K into it) and a realtor told her it is now worth $325K. This is part of an association of a handful of properties that share a private beach on a highly desirable lake in Michigan. I've looked through recent sales (trailing 12 months) to determine similar cottages with similar lakefront amenities, and although none are as small (most are 1000-1500 sq ft), I determined what I feel is fair market value based on cost/sq ft. One additional note is that this cannot be financed through a conventional loan nor can it be used as a short term rental because I would be purchasing the building on the land owned by the association, which I'd have partial ownership of.

I am considering offering $240K cash, or a lease option, with the following terms.

7 year lease @ $1K/month with the option to purchase at $225K at the end of the lease. 

My thinking is that this will 1. save them ~$11K in capital gains tax, 2. Allow me to put the money I'd pay for the property into gov't bonds paying roughly what the lease payment would cost, and 3. would give them ~$320K in total lease payments including the offset of capital gains, while it would be equivalent to me purchasing it for cash today at $225K.

I know there is an income tax liability on the seller's part for the lease payments, but I don't know their situation to judge the impact of that.

I've never done a transaction like this before, so please poke holes in it, or if you have a better option, please let me know.