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Charitable Bargain Sales
(Complete gift description)

If you’re in need of cash but also want to make a gift to the MU Foundation, this is the gift method for you. A Charitable Bargain Sale is a planned gift that enables both you to make a substantial gift to the MU Foundation and keep part of the value of the property as cash. By doing so, we all benefit.

Are you saying that this plan provides me with cash and a charitable deduction?

That’s exactly right. A bargain sale is the purchase of property (securities, real estate, etc.) for less than its fair market value. In such case, the difference between the fair market value and the sales price constitutes a charitable gift, for which you will receive a charitable income tax deduction.

The charitable bargain sale works like this:

  1. We mutually agree on a purchase price that is less that the property's fair market value, which has been determined by your independent appraiser.
  2. We may pay the purchase amount upfront, or issue you an installment note for a mutually agreed upon term of years and interest rate.

Are there other advantages to a charitable bargain sale?

Consider this, too. Not only do you receive a charitable deduction, but you also avoid capital gains tax on the portion of the transaction that was a gift to us.

What are some considerations if I decide to go forward with this?

  • First, we must review and approve the property.
  • Second, if the property you wish to transfer is not publicly traded securities, you will need to secure an independent appraisal of the property to establish its value for the deduction.

Our office can advise you on these and other matters that may arise during the course of our conversation.

I still am paying off my mortgage on my home. Will this work?

Note that if you give us property carrying debt – like a mortgage or a lien – and we assume and satisfy the debt, the IRS considers your donation to have been a bargain sale, even if we don't pay you any cash. The amount of debt we assume will be considered taxable income to you.