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Planned Giving for Financial Advisors

Charitable Bargain Sale — Frequently Asked Questions

  • What if the property has a mortgage or other lien on it?

    The mortgage or lien must be paid off prior to the Bargain Sale or with the sale proceeds received "at the table." This produces the best tax benefit to your client, and Harper College Educational Foundation cannot assume or pay off your client's lien or mortgage.

  • Can my client create a life income gift through a Charitable Bargain Sale?

    In some cases, your client may use the gift portion of her Charitable Bargain Sale to create a Charitable Gift Annuity.

    Placing real estate into a Pooled Income Fund is not advisable. Your client can also apply her sale proceeds to create a life income after considering whether the tax and financial benefits work for her.

    We will be happy to explore these options with you and/or your client.

  • Can my client choose the appraiser to value the property?

    Your client will need to substantiate her income tax charitable deduction with a qualified appraisal, and such appraisal must be performed by a qualified appraiser as defined by federal tax law. An appraisal by a real estate broker or appraiser who is not a qualified appraiser within the definition will not satisfy the requirements and your client's deduction could be denied.

    Your client's appraisal may end up serving as the justification for the fair market value determination in the bargain sale, but Harper College Educational Foundation may also hire an independent appraiser and/or consult with real estate professionals in evaluating the property's value.

    We and your client will work together to be sure the Charitable Bargain Sale transaction is satisfactory to all involved.

  • When will my client typically want to use a bargain sale?

    Bargain sales are most effective for clients who have an interest in our charitable mission, have an appreciated asset they would like to donate, but need an infusion of cash for some immediate purpose. Clients most commonly use the proceeds from a bargain sale of real estate to pay the entrance fee to a retirement community or to retire a mortgage on an existing home. Bargain sales of other types of property, typically art and other collectibles, are normally made to nonprofits which would retain and use the asset so as to ensure your client's income tax charitable deduction.

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The material presented on this Planned Giving website is not offered as legal or tax advice.
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