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Gift example
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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 the Zoological Society of San Diego.

You decide to transfer your home to us through a charitable bargain sale. You secure an independent appraisal stating that the house is worth $1,000,000, and we agree to pay you $600,000.

What are your benefits?

Fair market value

$1,000,000

Cost basis

$200,000

Capital gain

$800,000

Selling price

$600,000

Charitable deduction

$400,000

Donation portion of transaction ($400,000 / $1,000,000)

(40%)

Capital gain related to donation (.40 x $400,000)

$160,000

Purchase portion of transaction ($600,000 / $1,000,000)

(60%)

Capital gain related to sale* (.60 x $800,000)

$480,000


* The first $1,000,000 of capital gain on your primary residence is excluded from tax, so neither portion of gain was taxed in this example. If you had donated a different piece of property, the $480,000 gain related to our purchase would have been subject to capital gains tax.

For more information

Email us, complete the personal illustration form, or call us at (619) 744-3352 so that we can assist you through every step of the process.