Owning commercial, industrial or retail property could be a costly investment. It could be extremely rewarding if done appropriately- but still expensive. Carrying costs alone on these sorts of distressed property can be shocking. So for those considering selling a distressed or under used business, industrial or retail property the idea of spending More on marketing, repairs or other contingencies and the taxes involved is a burden that you would rather not have. Thus for this type of seller in the correct circumstances a real estate bargain sale is not just an excellent idea- it’s a lifesaver.
A real estate bargain sale is a mix of a cash transaction and substantial tax deductible donation. The nonprofit brings a bit of cash to the table to pay the evaluation and closing costs, and the seller receives a tax deductible donation that normally saves more of their regular income paid out as income tax than cash they would get through a conventional sale. But how does a bargain sale property transaction decrease your taxes?
C-Corporations and Distressed Property Sales
According to IRS Code Section 11 property sales are taxed as income instead of capital gains for a C corporation. Thus utilizing a real estate bargain sale to a charity such as Mercy Real Estate Foundation means that you’ll receive a tax deduction for your sale on your present and/or future taxes. This charitable tax deduction from gifting real-estate can be used in its entire on a quarterly tax return with enough taxable income or spread over several years, whatever would derive you the most benefit.
Speaking of Capital Gains and Distressed Sales’
Most of the time when selling business property it will be vital to pay capital gains taxes on the sale. For people participating in a real estate bargain sale however, you pay capital gains tax on the amount of cash you require the nonprofit to bring to the table. You’ll get a tax deductible donation on the remaining amount and be spared the burden of paying capital gains taxes on what would have been the profit from a standard real estate sale.
Therefore if you’re thinking about selling distressed property a bargain sale real estate transaction is an incredible technique to ensure that you sell your property rapidly and free from the hassles of contingencies and financing obstacles. This kind of sale is a mix of a cash transaction and a tax deductible donation and could be closed in as little as thirty days. And in accordance with the terms of IRS publication 561 you could also realize a greater value because of more liberal appraisal guidelines than those you would meet in a standard sale. Therefore consider a bargain sale real estate transaction for your distressed commercial property!
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