STEP-BY-STEP GUIDE TO BARGAIN SALES
Selling land at below fair market value constitutes a bargain sale. When such property is sold to a qualified charitable organization such as KHLT, the seller may receive significant income tax benefits.
If you are interested in selling land to KHLT through a bargain sale, these steps will be followed:
1. Evaluate property: KHLT representatives will visit your property to evaluate its ecological, recreational, or scenic values and make a preliminary determination as to whether your property meets KHLT's criteria for acquisition for conservation purposes or whether it may qualify as a trade land acquisition.
2. Discuss landowner's objectives: A KHLT representative will meet with you at the KHLT office or your home to discuss your objectives for the property. We will also explain the process of a bargain sale, including the option of an appraisal,and prepare a letter of intent. You should review this sale with your personal tax and legal advisors.
3. Request KHLT Board approval: If you decide to proceed with a bargain sale to KHLT, a Land Trust representative will present a review of the property and the letter of intent to the KHLT Board of Directors at the next regularly scheduled board meeting for formal board approval.
4. Prepare purchase agreement: KHLT will prepare a purchase agreement, to be signed by all parties, setting forth the terms of the bargain sale.
5. Check title and mortgage: KHLT requires proof of good title.
6. Prepare conveyance documents: KHLT representatives and legal counsel will prepare the deed.
7. Obtain an appraisal: If you or your advisor determines that the bargain sale will qualify as a charitable donation, you must select and hire an appraiser to analyze the market value of the property at the time of the sale. KHLT can provide you with a list of appraisers.
8. Sign deed: After a final review of the documents, you and KHLT's president and secretary will sign the deed. KHLT will then record the deed in the appropriate recorder's office.
9. Submit Form 8283 to the IRS: You must attach IRS 8283 (for "Noncash Charitable Contributions") to the income tax return that you submit for the year in which you sold the land to KHLT.