How a Bargain Sale Helped Offset Income Tax
Tim owned a 2.5 acre property in Maryland suitable for either a home or for farming. He bought the lot at an estate auction with the original intention of building a home there for himself. It was what made sense at the time, being that the large property was zoned for just one home. But then Tim changed his mind.
Tim put the property on the market for $175,000. He figured he was well within market range, since the neighborhood is a mix of both larger and smaller homes, running anywhere from $200,000-$500,000. This was a wooded lot, and Tim had completed a survey to confirm the original claim that the size of the lot was 2.5 acres. In addition, Tim sought out and received perc approval so that the future owner could build any size home desired. To Tim’s mind, the property had a lot of potential.
As a savvy property owner, of course, Tim had heard about the concept of doing a bargain sale.
Donating land for a tax write off was a good decision for Tim
His attorney drafted a contract in which Kars4Kids would pay him 40% of the appraised value of the property, and Tim would take the remainder as a tax deduction to offset his remaining income for the year.
Tim was so pleased with the process and its advantageous outcome, that he later approached us to donate another property he owned!