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(Part of a series of articles on charitable giving and the Union County Foundation by David Vollrath - Exec. Dir.) Over the life of this column we have discussed many creative ways to support your favorite charity. “Bargain sales” are yet another method that can work well for many donors. A bargain sale is an excellent way to receive value for a property while at the same time fulfilling charitable goals. The premise for a bargain sale is that the buyer, in this case a charity, purchases a property at less than the full value. This results in a sizeable charitable tax deduction for the seller that substantially offsets, or in extreme cases, even eliminates the seller’s tax liability on the sale proceeds. An example: Dan Donor owns a piece of undeveloped land originally purchased for $50,000. Over time the land has increased in value to $200,000. Dan has always wanted to set up a scholarship fund to honor the memory of his parents. After discussions with the leadership of the community foundation, he agrees to sell the property to the charity for $120,000. Why in the world would he do this? The reason is that Dan will bypass capital gain tax on the $80,000 gift ($200,000 - $120,000) plus receive a charitable income tax deduction of $80,000. In addition, Dan receives $120,000 cash. When all the tax implications are considered Dan ends up netting substantially more than the $120,000 sale price plus he has fulfilled his dream of honoring his parents through an on-going scholarship fund. The end result of this example transaction is that Dan was able to sell his land for substantially more than he originally paid for the property, while at the same time making a significant and lasting gift to charity. In addition to avoiding the difficulties and expense of selling the property himself, he has been able to work with local leaders to accomplish a life- long dream. As is always the case, you will want to consult your financial professional advisor(s) regarding your specific situation in regard to bargain sales. The Union County Foundation encourages you to consider your present and future charitable goals. The Foundation is equipped to help you achieve these goals by providing: planned giving and estate planning resource information, charitable gift annuities/life income plans, and a broad array of charitable choices. Please call us at 937-642-9618, email commfounduc@imetweb.net, reference our website at www.emarysville.com/unioncountyfoundation, or stop by our Marysville office at 126 N. Main St. We are committed to helping you.... “preserve your footprint in time.” |
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