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Bargain Sale

Do you have property that you would like to sell? Are you looking for a strategy to reduce your income taxes? A bargain sale might be the right strategy for you. Please note that the JMU Foundation Real Estate Committee must review and accept any real estate purchase.

Flowchart: Donor sells property to the JMU Foundation below fair market value and claims a charitable deduction for the difference between fair market value and the sale price.

Benefits of a bargain sale

  • Avoid capital gains tax on your charitable gift
  • Receive a tax deduction that will reduce your tax bill this year
  • Take the cash received from the sale and reinvest it to create future income, save for retirement, buy new property or achieve other financial goals
  • Create your legacy at Madison, help an area you are passionate about, and know you will make a difference for future generations

How a bargain sale works

  1. You sell the James Madison University Foundation your property for a price less than fair market value.
  2. You receive cash from the sale.
  3. You can take a charitable deduction for the value of your gift, which is the difference between the fair market value of the property and the sale price.
  4. While you may owe some tax on the sale proceeds you receive from the James Madison University Foundation, the charitable deduction from your gift could offset some, most, or all of your capital gains taxes associated with the sale.

More on bargain sales

A bargain sale may be accomplished even if you have a mortgage on your property. Because relief from indebtedness can have tax implications, please consult with your tax advisor prior to completing a gift of a bargain sale.

Contact us

If you have any questions about a bargain sale, please contact us. We would be happy to assist you and answer any questions you might have.

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