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Receive immediate cash and make a gift to Humboldt State University by selling to us a valuable asset, such as real estate, for less than its worth.
A bargain sale may be right for you if:
- You want additional cash now.
- You itemize your deductions and want to save income taxes.
- You want to save capital gains tax on the sale of your property.
- You own a valuable asset that you are willing to sell for less than it is worth.
- You want to make a gift to Humboldt.
How It Works
You sell real estate or other property to Humboldt State University for less than it is worth.
You receive immediate cash equal to your sale price. Your property becomes ours to use or sell.
How Your Gift Helps
Your gift will help Humboldt continue the academic principles that represent attributes of an academically integrated university, and provide a framework for accomplishing our collective vision and mission. This includes:
A bargain sale is a simple agreement in which you sell property, such as real estate or some other valuable asset, to Humboldt for less than the property is worth.
It is possible to sell any sort of property to us 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 that we can discuss whether we would be interested in acquiring the property for a bargain price.
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 if you itemize your deductions. (Note that if your bargain sale asset is tangible personal property, such as artwork or antiques, that Humboldt does not 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.)
You will also avoid capital gains tax on a portion of your capital gain in the gift property. For example, if you sell your property to us for one third of its fair market value, you will pay capital gains tax on just one third of your capital gain in the property. If the asset you sell to us is subject to debt, this debt will be added to your sales proceeds to determine your capital gains tax.
By removing your property from your estate, you may also reduce estate taxes and probate costs when your estate is settled.
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 accept your gift:
- 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.
- Once we accept your gift of real estate, we could become responsible for cleaning up any environmental problems your property may have. This sort of cleanup could be very expensive. Therefore, before we accept any gift of real estate, we routinely conduct a review to make sure the property has no environmental issues.
Ruth Smith, a devoted supporter of Humboldt State University, owns vacant land that she purchased years ago for $20000. The land was recently appraised at $300000. Ruth would like to make a major contribution, but she is planning improvements to her home and she needs about $60000 to finance her project.
Ruth is thrilled to learn that a bargain sale arrangement will allow her to make the contribution she envisions and get the cash she needs to complete her home improvement project. She’s also pleased with her $240,000 income tax charitable deduction, which will create tax savings in the year of her gift that more than offset the capital gains tax she’ll need to pay. This example assumes Ruth is able to itemize her income tax charitable deduction.
|Value of land:||$300000|
|Cost of land:||$20000|
|Income tax deduction:||$240,000|
|Capital gain to report:||$56,000|
|Capital gain avoided:||$224,000|
|Income tax saved @ 37% rate*:||$88,800|
|Capital gain tax @ 20% rate:||- $11,200|
|Net tax savings:||$77,600|
|Cash to Ruth:||+ $60000|
|Total benefit to Ruth:||$137,600|
*Assumes 37% rate and that Ruth itemizes her income tax charitable deductions.
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