Many people own commercial properties, which they prefer to sell off but are unable to do so in the usual manner. There may be a variety of reasons why such owners are trying to dispose of such properties. However, the two most common motives are that they need the money immediately and the properties no longer satisfy their needs. Whatever their justifications for selling such assets, there is a way they can get rid of such a property, obtain instant cash and satisfy their charitable desires. Through bargain sale, these owners can easily sell their old commercial properties and give something back to society.
The Welfont Group is a prominent company in America dealing in commercial brokerage. The specialists of this corporate enterprise go out of their way to assist their client to find, scrutinize, buy, sell, invest and manage real estate properties in the commercial market. They focus on representing the interests of their clientele, which also include institutions that the IRS declares as tax-exempt. While valuating their customers’ properties they adopt various tax saving strategies that have the approval of the IRS. These include 1031 Exchange and 170 Bargain Sale in order to maximize the market values of client’s property.
Meaning of Bargain Sale
The specialists of this company state that a bargain sale takes place when an owner of a commercial real estate asset sells his/her property to a charitable institution that IRS approves. However, the price that both parties agree to is usually less than property’s market value. The difference between the price that parties to the sale transaction consent to and the market value of property represents the owner’s contribution to charity. These experts say it is possible for the owners of such commercial real estate properties to take advantage of various bargain sale schemes in order to dispose of their assets. However, the most common form of such sale is transferring the ownership of the property to a charitable institution in exchange for immediate cash.
The experts further clarify that owners of commercial properties need to consider the following points before entering into a bargain sale:
- Intention to sell under bargain sale
The owner of a commercial real estate property must give a formal statement in writing of his/her desire to sell his/her property to a charitable institution. He/she must also state that he/she is also willing to give a portion of the sale proceeds of the property to charity.
The owner of the commercial real estate asset must pay all outstanding liabilities relating to property before he/she can put it up for sale. It is important to note that any commercial property with a mortgage is also taxable under bargain sale.
- Establishing the correct value
The commercial property owners need to determine the correct market value of their property before they dispose it under bargain sale.
The specialists at Welfont Group say it is essential for commercial property owners to understand the above factors before selling their real estate assets under bargain sale.