Like the 1031 Exchange? Love the 170 Bargain Sale!

If you like the idea of putting off paying hefty capital gains tax for years through a IRS 1031 Property Exchange, wait until you compare that to the cash at closing and huge tax credits of a IRS Section 170 Bargain Sale.
Perhaps you’ve already used the 1031 Exchange and are now ready to sell the property you acquired at the time. There is no reason why you can’t take advantage of a 170 Bargain Sale as well. This is an allowed follow-up transaction. Let’s hit the highlights of both tax strategies.

1031 Exchange
 The Seller must identify “like-kind” property to replace the asset of the sold property with 45 days of its sale, and purchase within 180 days.
 The replacement property must equal 100% of the value of the sold property to defer the total liability or the Seller will be taxed on the difference.
 When the replacement property is eventually sold, the capital gains realized become a tax liability again.
170 Bargain Sale
 The difference between the fair market value and the sale price of a property becomes the Seller’s charitable contribution deduction when the non-profit buys it at a reduced price.
 The 170 Bargain Sale can employ a more generous property appraisal method – an IRS 561 Appraisal (used for charitable donations only).
 Direct tax forgiveness through charitable credits from both the Federal and State governments plus the additional cash available at closing through the Bargain Sale, can replace a renewed tax liability when a 1031 Exchange replacement property is sold.
For an overview of the 170 Bargain Sale versus the 1031 Exchange, reach out to the team of Dr. Joe Johnson (Welfont Joe Johnson) at Welfont today.
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