In the world of business, knowing the rules and putting them to good use is imperative. Once you learn most of the rules, you may prefer the IRS Section 170 Bargain Sale (also known as Bargain Sale) better than the 1031 Exchange.
Unlike simpler games, however, the business world rule book is more than a bit hefty. Knowing all of it can be hard to almost impossible. That’s why some things tend to get overlooked.
Whenever you discover some type of deal or tax break you haven’t heard of before, it doesn’t only open new possibilities (which the Bargain Sale most definitely does). Often it throws new light on previous investments, showing how much better you could have done. Your choice would be different, if only someone told you… that’s exactly what we are going to do now.
There is a transaction type that you may not have heard of before. It has amazing new opportunities for tax savings and the achievement of philanthropic goals, as well.
IRS Section 170 Bargain Sale Better Than the 1031 Exchange
Many have heard of the 1031 Exchange. Businessmen and real estate brokers like its obvious benefits for getting tax deferrals on capital gains on certain types of properties. The 1031 Exchange is a really great strategy in many situations. However, most people don’t know how much better the Bargain Sale can help them save money while making a charitable contribution to a nonprofit. Best of all, the 1031 Exchange can be complemented with the Bargain Sale.
So, what is the IRS Section 170 Bargain Sale exactly?
The IRS Section 170 Bargain Sale transaction, also known as a Bargain Sale, has the potential to allow the property seller to save a great deal of money, which would normally be paid in income taxes. You receive this sizable tax deduction from a nonprofit that buys the property from you. This is the essence of the deal. It is done at less than full-and-fair market value in favor of a nonprofit, which allows you to make a charitable donation and get some significant cash tax cuts at the same time.
And if those two deals – the 1031 Exchange and IRS Section 170 Bargain Sale – sound good, imagine how much better they will be when you combine them!
When done properly, the combination of the two deals can gain you significant benefits from both, creating a much more desirable outcome for you as a seller. The IRS Section 170 Bargain Sale allows you to divest a property held in a 1031 Exchange. Then, while paying insignificant or no taxes for the whole transaction, sellers gain cash value from the transaction. Moreover, the IRS Section 170 Bargain Sale can reduce your income tax for several years ahead, further increasing your total earnings over time.
The 170 – One of the Industry’s Best Kept Secrets. Or is it?
For a transaction that many are still unaware of, the Bargain Sale is actually pretty popular. Here are some numbers. There are over 20,000 IRS Section 170 Bargain Sale transactions occurring in the United States annually with a total value of over $8 billion. In fact, many investors like the Bargain Sale better than the 1031 Exchange. For a well-kept secret, people who know it seem to be doing well for themselves!
Now you can do as well.
Welfont believes that there’s room enough for everyone. There is no shortage for property sellers who will benefit from combining the 1031 Exchange and the IRS Section 170 Bargain Sale. There certainly are plenty of nonprofits who are willing to assist you.
And it’s our job to connect between the two, making sure sellers find the right partners for this deal, and do better for themselves and others.