In the property market, there are owners who want to dispose of their real estate assets because they need immediate cash. However, these sellers have been unable to find the right buyers under the prevailing circumstances. At the same time, they are willing to donate a certain portion of the sale proceeds for the transfer of their properties to charity. IRS Section 170 bargain gives such property owners an opportunity to sell of their real estate assets while giving something back to society. It allows such individuals and businesses to maximize their profits from the transfer of old commercial properties that they do not need while being philanthropic.
The Welfont Group is a prominent corporate enterprise in America that deals in commercial brokerage. The experts in this company focus their attention on helping their clients search for, analyze, finance, buy, manage and sell commercial properties. Their mission is to provide real estate investors with a win-win situation where they can maximize their after-tax profits from the sale of their properties. These professionals also specialize in adopt effective tax-saving schemes that the IRS approves like 1031 Exchange and the IRS Section 170 Bargain Sale for their clients’ benefit. They also go out of their way to represent their clients along with other institutions that the IRS regards as tax-exempt.
IRS Section 170 Bargain Sale
The property specialists in this company admit that understanding how to sell commercial real estate assets under IRS Section 170 Bargain Sale can be a challenge for property owners. Under this tax-saving strategy, owner can sell his/her commercial real estate asset to a charitable institution at a price, which is below its fair market value. It allows sellers to declare the difference between the actual sale proceeds of the property and the market value as a donation to charity. In this way, the seller can receive immediate cash from the sale of his/her commercial property and claim a tax deduction for the charitable donation. This help to encourage individuals and profit-earning corporate enterprises to engage in philanthropic work.
Properties applicable under this section
These experts go on to explain that it is essential for individuals and companies to know that kinds of properties they can sell, transfer or exchange under Section 170Bargain Sale. Under this tax-saving scheme, only transactions involving the sale, transfer or exchange of commercial properties that have a high market value can qualify. These professionals also state that such commercial properties may also have mortgages. In such a situation, the tax authorities will reduce these mortgages from the amount, which sellers claim as charitable donation for tax purpose.
The Welfont Group experts further explain that real estate investors need to keep in mind the following rules, which oversee transactions that fall under Section 170 Bargain Sale:
- The seller must have sufficient taxable income to qualify for this tax deduction;
- The tax authorities need to recognize the real estate buyer as 501(c)(3) entity; and
- The authorities will conduct an independent assessment under IRS 561 within 60 days of the transaction.
They say it is a suitable way for property owners to dispose of their commercial real estate asset and conduct charitable work.