Does a rent-to-own arrangement change how the seller reports the property for tax purposes?

It can, and the answer genuinely depends on how the specific arrangement is structured rather than having one blanket answer that applies to every rent-to-own deal. The core question is whether the arrangement is really an option to purchase, where the tenant simply has the right, but not the obligation, to buy later and the seller retains ownership until then, or whether it's better characterized as a disguised sale with financing, where the substance of the deal shows ownership has effectively already transferred to the buyer even though the paperwork is dressed up as a rental.

These two characterizations lead to different tax reporting for the seller: an option arrangement generally keeps the seller reporting rental income in the meantime with a later sale when the option is exercised, while a disguised-sale characterization could mean the transaction is treated as having occurred earlier than the paperwork suggests. Because this depends on the actual terms of the agreement, how the payments are structured, whether there's a genuine option versus a binding obligation to buy, and how risk and control over the property are actually allocated, the specific contract needs to be assessed on its own terms rather than assuming a standard rent-to-own template always works the same way.