When a generous person’s cash flow will not allow them to give as they desire, some choose to give a gift of appreciated property instead. By directly donating a gift of appreciated property to a ministry, a giver can reduce their taxes and make a substantial gift to charity.
What if you want to pursue this option but the property providing the greatest tax benefit for you has a value that exceeds your desired gift?
There is a solution called a bargain sale. If you choose to enter into a bargain sale with a charity or ministry, the organization will agree to purchase the property from you for the difference between the property value and your desired gift. You’ll receive payment for the difference, the ministry will receive a portion of the property as a gift, and the tax advantages that apply to an outright gift of appreciated property will be available to you on the gift portion.
In this way, you’ll only pay capital gains tax on the portion of the property purchased by the charity. Your charitable deduction will be for the difference between the purchase price paid by the charity and the fair market value of the property.
Interested in learning more? Email us at contactcenter@cdfcapital.org or call us at 888-540-7112. We would be glad to walk you through how to go about this process and provide you with a customized illustration based on your unique generosity desires.
