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Buying Religious Corporate Property 

Everyone Can Benefit: The Bargain Sale Transaction 

 With the cost of real estate in New York, it is becoming increasingly difficult for religious and non-profit organizations to be able to afford to purchase real estate. One way to reduce the out of pocket costs, is to structure the sale using a Bargain Sale to benefit both the Seller and the non-profit purchaser. 

In New York (especially New York City), a seller who sells property significantly higher than when they purchased it, may be required to pay up to 40%-50% in taxes on the difference between their cost basis (the difference between the asset’s cost basis and the current market value) and the sales price. By using a Bargain Sale, a Seller may be able to avoid this tax. 

Essentially, a Bargain Sale purchase allows a seller to reduce capital gains on a sale by selling property to a non-profit or religious organization for less than fair market value (FMV). The difference between the FMV and the amount realized, i.e., the “bargain element,” is intended to be a charitable contribution. The seller is donating the difference between the FMV and the sale price to the charity. 

Note that while this type of sale can save a taxpayer who donates all or part of a property thousands of dollars in taxes and allows a non-profit or religious organization to obtain property as a donation for less than fair market value, the rules are very detailed and should be done in consultation with a qualified accountant. 

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