A bargain sale is a simple agreement in which you sell property, such as real estate or some other valuable asset, to Robin Hood for less than the property is worth.
Eligible property
It is possible to sell any sort of property to Robin Hood for a bargain price. In addition to real estate, you can complete a bargain sale arrangement with collectibles such as artwork or antiques, other personal property or securities. Please contact us about the property you are considering so we can discuss whether we would be interested in acquiring the specific asset for a bargain price.
Tax benefits
You will receive an income tax charitable deduction in the year of your gift. The amount of your deduction will equal the difference between the fair market value of the property you donate and your sale price. Your income tax savings will depend on whether you itemize your deductions. (Note that if your bargain sale asset is tangible personal property, such as artwork or antiques, that Robin Hood can't put to a use related to our exempt purpose, your deduction will be based on your cost-basis rather than the fair market value of the property.)
By removing your property from your estate, you may also reduce estate taxes and probate costs when your estate is settled.
Special considerations
If you are interested in selling us real estate or tangible personal property at a bargain price, you will need to establish the value of your property by obtaining a qualified independent appraisal.
To be valid for claiming your income tax charitable deduction, your appraisal must be conducted no more than 60 days before the bargain sale is completed and no later than the due date, including extensions, of the tax return for the year in which you make your gift.
If you are considering a gift of real estate, our organization requires the following additional steps before we can accept it:
- We will need to examine your property and conduct our own analysis of its value. For example, we will want to know if there are any debts, taxes or liens owed on your property.
- We will need to examine your property and conduct a review of environmental issues. Once we accept your gift of real estate, we become responsible for cleaning up any environmental problems your property may have. This sort of cleanup can be very expensive, so we take steps to ensure we will not experience additional costs navigating environmental issues.
Quintin Mays, a devoted supporter of Robin Hood, owns vacant land in an area under rapid development that he purchased years ago for $15,000. The land was recently appraised at $250,000. Quintin would like to make a major contribution to Robin Hood but is planning home improvements that will cost about $50,000.
Quintin is thrilled to learn that a bargain sale arrangement will allow him to make his contribution to Robin Hood and get the cash he needs to finance his home improvement project. He’s also pleased with his $200,000 income tax charitable deduction, which will create tax savings in the year of his gift that more than offset the capital gains tax he’ll need to pay. (Note: Example assumes Quintin is able to itemize his income tax charitable deduction.)
| Facts | |
|---|
| Value of land | $250,000 |
| Cost of land | $15,000 |
| Capital gains | $235,000 |
| Sale price | $50,000 |
| Benefits | |
|---|
| Income tax deduction | $200,000 |
| Capital gains to report | $47,000 |
| Capital gains avoided | $188,000 |
| | |
| Income tax saved at 37% rate* | $74,000 |
| Capital gains tax at 20% rate | - $9,400 |
| Net tax savings | $64,600 |
| | |
| Cash to Quintin | + $50,000 |
| Total benefit to Quintin | $114,600 |
*Assumes 37% rate and that Quintin itemizes his income tax charitable deductions.
