1031 exchange lease option

Dear 1031x: I would like to do a like exchange on a rental. The buyers will have a  lease option to buy. What happens to  the rent credit money.

Dear Mr. T:  Usually rent credit money is collected monthly.  It only becomes proceeds from the sale of real estate when the option is exercised and the transfer takes place.  If you return the rent credit to the closing agent as the transfer takes place, and make it part of the exchange proceeds then you can defer income tax on that portion of the purchase price.  Sincerely,

Steve Hickox
Attorney / President