Charitable Bargain Sale

What is a Charitable Bargain Sale?

Suppose you would like to give a residence or other real estate to Oxford University, but you have an outstanding mortgage that you need to pay off. Or, suppose you need cash for a down payment on a retirement home. A Charitable Bargain Sale may be a great way for you to benefit Oxford University and yourself at the same time.

How Does It Work?

Part sale and part gift, a Charitable Bargain Sale is conducted under special IRS rules. You and Oxford University agree to a purchase price for your property that is less than the property’s market value as determined by a qualified appraisal. Oxford University pays you the purchase price in cash, an installment note, or a combination of both as mutually agreed upon. This payment is typically designed to provide you the cash to retire a mortgage or for other purposes. You qualify for a charitable income tax deduction for the gift portion of the transaction. You will be liable for capital gains tax on the sale portion only.


You and your spouse donate a personal residence having an appraised value of $500,000, and an adjusted cost basis of $100,000 in a Charitable Bargain Sale arrangement. Bargain Sale price of the property is $125,000, payable in cash. Here are the calculations:

Charitable Bargain Sale



Sale Portion

Gift Portion













Summary of Benefits

Gift to Oxford University


Payment to donor


Charitable deduction


Reportable capital gain on sale portion


Capital gains tax on sale portion (15%)


Capital gain forgiven on gift portion


Capital gains tax savings on gift portion (15%)


*Since there is a capital gains tax exclusion of $500,000 per couple on the sale of a personal residence, all capital gains tax is avoided in this example.

PLEASE NOTE: This example is for illustration purposes only and is not intended as legal or tax advice. Consult your own legal and tax advisors prior to making any material decisions based on this date.

Send me a Personal Illustration!

For more information

E-mail us, complete the Personal Illustration form, or call us at 212 377 4900 so that we can assist you.