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Charitable Bargain Sales
(Gift example)
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 University of Cincinnati Foundation.
Example
You and your spouse donate a personal residence having an
appraised value of $500,000, and an adjusted cost basis of $100,000 in a Charitable Bargain Sale arrangement. Bargain Sale price of
the property is $125,000, payable in cash. Here are the calculations:
Charitable Bargain Sale
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Total
|
Sale Portion
|
Gift Portion
|
Value |
$500,000 |
$125,000 |
$375,000 |
Basis |
$100,000 |
$25,000 |
$75,000 |
Gain |
$400,000 |
$100,000 |
$300,000 |
Summary of Benefits
Gift
to University of Cincinnati Foundation |
$375,000 |
Payment
to donor |
$125,000 |
Charitable
deduction |
$375,000 |
Reportable
capital gain on sale portion |
$100,000 |
Capital
gains tax on sale portion (15%) |
$0* |
Capital
gain forgiven on gift portion |
$300,000 |
Capital
gains tax savings on gift portion (15%) |
$45,000 |
*Since there is a capital gains tax exclusion of $500,000 per couple on the sale of a personal residence, all capital gains
tax is avoided in this example.
PLEASE NOTE: This example is for illustration
purposes only and is not intended as legal or tax advice. Consult your
own legal and tax advisors prior to making any material decisions based
on this date.
For more information
Email us,
complete the personal illustration form,
or call us at (513) 556-6147 so that we can assist you
through every step of the process.
University of Cincinnati Foundation
51 Goodman Drive
Cincinnati, OH 45219-0970
(513) 556-6147
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