Owning underutilized or distressed property can be a critical burden. There’s carrying costs to consider, the head ache of maintenance and concern for the safety of an unoccupied building. But selling this type of property can be equally stressful and no more rewarding if not pursued appropriately. A good way to avoid these stressors is to consider a real estate bargain sale. A bargain sale real estate transaction requires selling your distressed property to a charity non profit organization. But how can you benefit from this, besides by making an excellent charitable contribution to society?
Tax Benefits of Gifting Real Estate
The real estate bargain sale is an option that was developed by the federal government IRS Code Section 170 and which predates the popular and more well known 1031 exchange. This form of bargain sale to charity permits the seller to realize more value from their investment property while minimizing their tax liability. Also the seller can get a charitable donation deduction on their taxes which can be used in one quarterly return if there is adequate income or spread out up to six years.. According to IRS publication 561:
‘If a contribution is made in property other than money, the amount of the deduction is based on the fair market value of the property in the time the contribution. The fair market price is the price where the property would change hands between a willing purchaser and a willing seller, neither being under any compulsion to purchase or sell and both having fair knowledge of relevant facts.’
What does that mean for you? It means a fast sale and typically more value than what the property may bring in a classical selling environment.
High Price, Fast Distressed Sale
Seems too good to be true right? For those who have been sitting on a distressed property for quite a while the concept of a quick, easy cash sale for a highest profit is just about as easily acceptable as a genie popping out of a lamp and removing the property from existence. But with a real estate bargain sale these dreams can really come true. As a result of rules governing the real estate bargain sale assessment technique it is possible to assess a higher fair market value than what might be obtained with a quick bank appraisal. As these sales are cash purchases closing can happen in as little as 30 days!
So by benefiting from a bargain sale real estate transaction instead of a more traditional selling technique the seller may realize a higher value, pay minimal capital gains taxes, receive a charitable donation deduction and enjoy a quick sale free of trouble and contingencies. All while giving to charitable organization! Your distressed property sale could be a painless and profitable project.
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