A bargain sale is the sale of property or other items to your local Sutter Health affiliate for less than its fair market value.

The transaction is considered part sale and part gift. You are paid cash for the sale price. The gap between the fair market value of the land (or other item) and the sale price is considered a charitable donation. With the cash you receive you can pay off an existing mortgage and even purchase other property.

Almost any type of asset (land, artwork, securities, etc.) may be sold in a bargain sale depending on its suitability and the amount of cash needed by your local Sutter affiliated organization for the purchase.

What are the advantages?

The charitable donation portion of the bargain sale (the gap between the fair market value and the sale price) qualifies for income tax deduction. It may be carried forward for five years if not fully usable in the year of the gift. A bargain sale also allows you to receive some money while making a charitable gift. A bargain sale may avoid capital gain tax liability on highly appreciated property.

How it Works

Elizabeth and Ken had some rental property as an investment. After Ken passed away, the management and maintenance of the property had become a burden for Elizabeth.

She asked her CPA about selling her property or perhaps giving it to her local Sutter Health affiliate. Elizabeth liked the idea of donating her property, but was worried because she still owed $125,000 on the mortgage. Elizabeth’s CPA did the calculations and learned that a bargain sale could give her enough cash to pay off the mortgage and other closing costs, but would also provide her with a generous income tax deduction that would more than offset any capital gain tax that would come due.

Elizabeth: "This was very much a win-win solution for me. By making sure that the mortgage and the selling costs were covered, I was free to donate the property and was able to get rid of a huge burden in my life. I also get an income tax deduction and I get to see the impact of my gift today."

The capital gain portion of a bargain sale is a little tricky. For more detailed information please contact us.

If you would like to discuss how a bargain sale can benefit Sutter Health and you, please contact us.

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Please note, individual financial circumstances will vary. The information on this site does not constitute legal or tax advice. As with all tax and estate planning, please consult your attorney or estate specialist. All material is copyrighted and is for viewing purposes only. Use of this site signifies your agreement with the terms of use. The content in this Planned Giving section has been developed for Sutter Health by Future Focus. Please report any problems to the Webmaster Revised: June 23, 2006 11:53