How IRS Section 170 Bargain Sales Help The Community

While much has been written about the benefits that investors, buyers, and sellers derive from the IRS Section 170 Bargain Sale, one much-overlooked aspect of the transaction is the benefit that society gets from the sale.

The IRS Section 170 Bargain Sale was originally designed as a way to promote giving and to preserve wealth for donors and sellers alike. Every year, there are more than 200,000 IRS Section 170 Bargain Sale transactions, with an estimated total value of $8 billion yearly. Non-profit organizations typically receive a substantial amount out of these transactions. On top of that, there are other ways by which a Section 170 Bargain Sale can have a positive impact on the community.

First, it reduces waste and allows underutilized, distressed property to be transferred to another entity that might have a productive use for it. The Section 170 Bargain Sale allows the owner of the property to get a cash tax cut based on the full and fair market value of the property, thus giving the owner additional funds. These extra funds can then be used for another project, such as a new mall, factory, or commercial spaces, that generate jobs in construction and the subsequent business operations, supporting households and creating taxable income for those who work in the projects.

The recipient of the property, in return, gains an asset that can either be utilized or sold for extra cash. Here’s an example: The American Red Cross receives an old apartment building as a donation during a 170 Bargain Sale transaction. The Red Cross can choose to renovate the building as a charity clinic or training center, thus generating jobs in construction and the operation of the repurposed property. The donated building can also be sold to generate extra funds for Red Cross operations across the globe.

The same approach can be taken when it comes to properties included in the National Register of Historic Places. Private owners of listed properties are often put off by the high cost of maintenance, renovation, or restoration of the buildings they have, and often allow their properties fall into disrepair. We suggest that these owners look into the IRS Section 170 Bargain Sale as a way to let go of their properties while maximizing their returns.

Unknown to many, National Register of Historic Places listing does not require the owner to surrender the property to the state or to allow public access to it. In fact, full ownership rights are retained. Therefore, owners of these properties can do whatever they choose, such as renovating it, repurposing it, or even selling it to another party. Non-profit organizations are constantly expanding and are in search of additional office and warehouse spaces, and the IRS Section 170 Bargain Sale is the ideal way to transfer ownership of your listed property to a charity. At the same time, the owner preserves the cultural heritage of the place, thus not only benefiting the charity, but also the community as a whole.

As the industry leader in IRS Section 170 sales, The Welfont Group has helped many clients navigate the process and has advised them on the possible alternative uses for their property. To learn more about IRS Section 170, visit our Frequently Asked Questions.