Seeking Advice - Restaurant Sales (selling side) Best way to structure sale
EDITED

Thanks for asking about clarification.

I bought a building 6 years ago; the buildout was a high end restaurant that was in foreclosure. I bought all the equipment that came with it, and leased it 100% ready to go. The tenant who rents/runs the restaurant has their own operation for which I am uninvolved. I have finally paid off the building 100%.

There is an option to buy. The tenant will take the option, but the structure of the purchase is open.

The purchase is 200k, but the terms of the option are just that I get that value. The operator is paying full cash. I have to option to then sell the building for 100k and the equipment for 100k (there are two major kitchens insisde), or is it wiser to just sell it for 200k. Illinois. Thinking about my income taxes. Thinking about their future property taxes. The building cost me 100k when I bought it.

A broker wrote into the initial contract when he found the tenant, and I missed it, that if this same occupant exercises their option, he gets ANOTHER 6% on the sale price. 

&amp;#x200B;

&amp;#x200B;

Thanks!
[{"id": "hqcav7g", "text": "The tenant has an option to buy. They are exercising that option.\n\nWhat exactly is your question? Why would a broker be involved? You are forced to sell to the tenant at the option price.", "replies": [{"id": "hqclqee", "text": "Sorry about the confusion. I rewrote the questions/advice request to better reflect the situation.", "replies": [{"id": "hqcpc81", "text": "&gt; A broker wrote into the initial contract when he found the tenant, and I missed it, that if this same occupant exercises their option, he gets ANOTHER 6% on the sale price. \n\nAs far as this part goes, you could offer the tenant to exchange the existing option for a short term (1 year?) lease at a low rental rate with an option at the end at another price WITHOUT broker's commission.\n\nBrokers in this sub will probably downvote me to hell on this, but I don't see why you should pay another $12k to the broker when the tenant exercises the option or renews the lease.\n\nI have no idea about taxes in Illinois. For federal taxes, I figure you'd want more in the building than in equipment because of depreciation recapture but you don't mention any of the useful info to determine tax consequences of one allocation or another.", "replies": [], "depth": 3}, {"id": "hqe9agg", "text": "Your posts now states a fact.\n\nDid you have a question?", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hqcdg9e", "text": "Your post doesn't make any sense.  First, you state you bought a restaurant.  Then you suddenly own the building.  Now, you have a Tenant who leases the restaurant?  And now the Tenant has an option to buy?  Buy what?  The restaurant or the building?", "replies": [], "depth": 1}, {"id": "hqckaxm", "text": "So first off your question makes no sense - I have no idea what you own (or why you\u2019re excited for both sides aren\u2019t you one side? Is there another side) - do you own a restaurant, a restaurant and a building, or a building that is 100% leased to a restaurant? Secondly, no idea why a broker would be involved, there\u2019s an option - what does the lease say? Third, depending on what you own I have no idea how to value it - an opco trades a lot different than real estate than does an opco that owns real estate. Finally, the allocation between FF&amp;E and Real Estate is something you need an accountant to hash out - if sales tax is greater than seller transfer tax then put all value onto property and vice versa (depending on ability to get accountant to sign off on either direction).", "replies": [{"id": "hqclhec", "text": "I rewrote it to make more sense. Sorry.", "replies": [{"id": "hqcmmah", "text": "Well then it looks like you owe the broker 6% on the $200k and you should talk to an accountant about the allocation between FFE and Real Estate for the purchase to minimize taxes. Realistically the FFE that you own is probably pretty depreciated after 6 year so likely the value goes to real estate which in IL is where you want to be anyways, bulk sales tax in IL is no joke if I recall.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hqcklo5", "text": "You should sell it for the agreed price or formula that the contract offers the building (and possibly contents) for sale.", "replies": [], "depth": 1}, {"id": "hqckykw", "text": "A quick read of this guys posts will explain everything.", "replies": [], "depth": 1}]