A charitable real estate bargain sale combines a sale with a gift. Instead of donating an entire property without receiving payment, an owner transfers it to a qualified charitable organization for less than its fair market value, with charitable intent. The IRS treats the transaction as partly a sale and partly a charitable contribution.
Chai Lifeline describes bargain sales as one way for property owners to support its work while receiving payment for part of a property's value. Every proposed arrangement requires its own review. A bargain sale is not an automatic offer to buy a property.
Separate the two parts of the transaction
The sale portion and the charitable portion need separate analysis. Payment may provide liquidity, but the sale portion can also produce taxable gain. The difference between an appraised value and the consideration received is a starting point for understanding the charitable element; it is not a promise of the deduction an owner may claim.
Under the IRS rules, when a charitable deduction is allowable, the property's adjusted basis is allocated between the portion sold and the portion contributed. This is one reason an owner's purchase history, improvements, and other basis records matter.
Compare the options before choosing
Ask your advisers to compare a conventional sale, an outright gift, and a proposed bargain sale using the same underlying information. Useful questions include: What cash would be received? What costs would be paid? What gain might be recognized? What documentation would be needed? What would the charitable organization receive after the transaction?
A comparison should describe assumptions clearly. A headline property value alone cannot answer those questions.
Connect the transaction to the charitable purpose
Chai Lifeline's published program describes using or selling contributed property to support its services. Its real estate pages also explain that transactions are administered by an independent nonprofit. Ask the team to identify the legal recipient and explain how a proposed transaction would be carried out.
Before entering an agreement, have your own tax and legal advisers review the terms and current-year rules. Neither acceptance, a closing timeline, nor a particular tax outcome should be assumed.
Sources
IRS Publication 526: charitable contributions and bargain sales
Information on this site is general and is not tax, legal, or financial advice. Eligibility, property acceptance, transaction terms, and any tax benefits depend on your circumstances. Consult your own qualified advisers before making decisions.