Does the value of your home or other property make up a significant portion of your portfolio? A charitable bargain sale will enable you to make a gift of real estate or other assets to The Nature Conservancy and receive cash back from us.
In a bargain sale, The Nature Conservancy purchases real estate or securities from you for less than fair market value. The difference between market value and the purchase price is your gift, for which you receive an income tax deduction. You also avoid capital gains tax on the donated portion of the property.
Some donors choose a lump-sum bargain sale payment to help them purchase their next home, or as the entry fee for a retirement facility. Others prefer the income stream from an installment note.
You're ready to move to a retirement facility across town. You know that you will need some of the equity in your current home for the entry fees there. But your home has appreciated significantly over the years, and you would like to use some of the excess value to fund a gift to The Nature Conservancy.
You decide to transfer your home to us through a charitable bargain sale. You secure an independent appraisal stating that the house is worth $1,000,000, and we agree to pay you $600,000.
|Fair market value||$1,000,000|
|Donation portion of transaction ($400,000 / $1,000,000)||40%|
|Capital gain related to donation (.40 x $400,000)||$160,000|
|Purchase portion of transaction ($600,000 / $1,000,000)||60%|
|Capital gain related to sale* (.60 x $800,000)||$480,000|
* The first $500,000 (for a couple) or $250,000 (for an individual) of capital gain on your primary residence is excluded from tax, so neither portion of gain was taxed in this example. If you had donated a different piece of property, the $480,000 gain related to our purchase would have been subject to capital gains tax.
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You can protect oceans, coasts and other natural places by making a planned gift with The Nature Conservancy. Contact us today.September 28, 2012