Commercial Investment Real Estate is the magazine of the CCIM Institute, the leading provider of commercial real estate education. CIRE covers market trends, current developments, and business strategies within the commercial real estate field.
Issue link: http://cire.epubxp.com/i/306204
17 May | June | 2014 CCIM.com or use cash assets to f ll out the commitment. Losing credit for the first transaction was not an option if the charity wanted to save this wonderful donation. T e team of accountants and attorneys involved in the original property purchase agreement came up with a solution. The donor/seller and buyer agreed to amend the purchase agree- ment to allow the donor/seller to add a provi- sion for an Internal Revenue Service Section 1031 exchange. By exchanging the equity in the property for another property, it allowed the donor to freely donate the second prop- erty without capital gains taxation. T e purchase of the condo was completed as planned. T e net proceeds from the clos- ing were placed into an escrow account controlled by a facilitating agent. With the expertise of the university's real estate spe- cialist, a replacement property was located and purchased within the guidance of IRS 1031 exchange provisions. Once the second property was closed, the donor leased the property for a short period of time and decided to move forward with a bargain sales agreement. T is is a simple agreement in which a donor sells securi- ties, real estate, tangible personal property, or other assets to a qualif ed charity for less than their fair market value. T e bargain sale reimbursed the donor for costs related to the property exchange and the university for funds advanced to repair the replacement property. Af er the reimburse- ments were made, the gif was booked at very nearly the face value of the original property value when it was f rst of ered as a gif . A buyer was located for the second prop- erty and closing took place. Funds were dis- tributed to each party as the donation agree- ment spelled out. Value of original property donation: $570,000 Final booked value: $562,000 T e professionals who play a role in this type of arrangement included a tax attorney, certif ed public accountant, title company of cer, the university's general counsel, a facilitating agent, and a Realtor with Section 1031 exchange experience. CCIM members might be well served to use their creative real estate knowledge to help public charities fulf ll their missions. It is estimated that more than $65 trillion of assets will be transferred by this generation to the next during the next 25 years. About 40 percent of this amount is in real estate equities. Seize the day! Chase V. Magnuson, CCIM, is president of Real Estate for Charities in Arlington, Va. Contact him at chasemagnuson@msn. com. Log on for the latest CCIM member beneļ¬t National Virtual Deal Making Session CCIM Designees present property listings to CCIM members and prospective buyers in a free webinar. Visit ccimdealmaking.com for more information. TUEJUNE 3RD 2014 SESSIONS TUEAUGUST 5TH TUEOCTOBER 7TH TUEDECEMBER 2ND Don't let this exclusive opportunity pass you by. Register for the JUNE 3RD session today. 1 6 - 1 7 D - I n v e s t m e n t . i n d d 1 7 16-17 D-Investment.indd 17 4 / 2 9 / 1 4 2 : 4 3 P M 4/29/14 2:43 PM