REPURPOSING A RESTAURANT PROPERTY
Investor owned a 19,000 square foot restaurant building for more than 30 years and, due to yearly depreciation and value increase, was facing significant capital gains/recapture taxes under a conventional sale.
The property was vacant over the last 5 years, during which the investor was obligated for mortgage payments, property taxes, insurance, maintenance and utilities. The investor decided to combine his charitable intent with a liquidation and tax strategy by making a charitable donation of the property.
The donor obtained a qualified appraisal of $900,000 and Realty Gift Fund accepted his offer of a Bargain Sale, agreeing to pay $350,000 in cash to extinguish the existing debt and to accept a charitable contribution for $550,000.
RGF listed the property for $900,000. A buyer was located who desired to open a restaurant but was required to demolish the improvements to accommodate new building and land regulations. A price was negotiated to accommodate the buyer’s plan and city’s requirements, and the sale provided RGF excess cash funds as a major gift.