Question about Treating the Credit in a Lease-to-Own Agreement
We signed a lease-to-own contract for 60 months. At the end of the term, we are obligated to provide a $100,000 credit at closing toward the purchase price for the buyer/tenant. This credit amounts to $1,666 per month, with the monthly rent set at $3,300.
From an accounting perspective, should the $1,666 per month be treated as a liability (deferred credit) and excluded from income, or should it be recognized as income and then applied as a credit at closing?
This property is owned by a multi-member LLC.