Real Estate—Bargain Sale
A donor who wants to recover a portion of the value of the property that he or she wishes to contribute to Georgia Tech may consider entering into a bargain sale transaction. In effect, a bargain sale is a sale of property to charity for less than its fair-market value. The bargain sale price must be any amount mutually acceptable to the charity and the donor.
For example, John Miller, 78, owns a vacation home he no longer uses. He bought the home for $40,000 some years ago, and it is now worth $120,000. He offers to sell it to Georgia Tech for $40,000. As a result, he receives $40,000 from Georgia Tech and can deduct the contributed portion of $80,000 for income-tax purposes. John must also report a capital gain of $26,667. (The reportable capital gain is arrived at by dividing the sale price of $40,000 by the fair-market value of the property—$120,000—and multiplying the result by the gain—$80,000.)
Please note: Because the federal estate tax has been repealed for 2010, there is no current estate tax in 2010 for the gifts described on this page. However, the consensus opinion among professionals is that Congress will enact an estate-tax law that may be retroactive to January 1, 2010. It is very important that you seek the advice of your estate-planning attorney to determine what changes, if any, need to be made to your existing estate plans, and then again if Congress reinstates the estate tax sometime later this year.
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