Selling Commercial Real Estate And Tax Deduction

Added August 19, 2005 by Ilyce R. Glink and Samuel J. Tamkin

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Summary: When you want to sell commercial real estate to a non-profit such as a church, the group may not be able to pay you full property value. What can the non-profit do to make the commercial real estate sale worth it for the seller? The group may be able to offer the seller a tax deduction in exchange for a cash contribution in addition to the property. It's important to involve an attorney in the transaction.

Q: My church is considering purchasing a piece of commercial property and using it for our new church facility.

The seller has one price in mind. However, we would like to make an offer on the property and allow the seller to make a contribution to the church for a portion of the sales price. This will lower the selling price for us and provide a taxable contribution to the seller.

Can we do this?

A: If you and the seller are in agreement as to price, you can structure the transaction to benefit both the seller and your church. You will, however, need a willing seller who wants to make a contribution to the church. You can't force someone to make a donation if he isn't inclined to do so.

Keep in mind that the structure of the transaction must be fair and at arm's length. If the purchase price is agreed to and the seller wants to make a contribution to the church, you should be fine.

If the church has an attorney, you should consult further with the attorney on what you are planning to do.

Aug. 19, 2005.

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