Tax write off non-profit organiztions

[zuppinger]

What is the name of your state? Vermont

My husband and I are currently in the market to buy some real estate here in Vermont as a primary residence. We posted a message on a real estate message board and was contacted by someone from a non-profit organization saying that he could help us by negotiating a contract that would save the seller a hug amount of money in tax breaks. Here is what he wrote:

Upon being authorized by you to negotiate we would offer seller one of two options, depending on the dollar value of the transaction and seller's income tax situation.

1. We offer seller his asking price but holding a 15% note as the down payment. Upon closing, seller would donate the held note to our IRC 501[c][3] organization - getting in return a tax deductible, contribution certificate and IRS Form 8283 in an amount sufficient to offset his capital gain. We would assign the contract to you per agreement.

2. We would appoint the seller to our Property committee and authorize him (via binding and irrevocable agreement) to sell this property to you (at a designated price) and retain 90% of the proceeds as their fee. Seller would then donate the propriety to our org - getting a huge charitable income tax deduction (maybe eliminating income tax for up to six years).The 10% would be remitted to our org. The effect of this transaction means seller would avoid capital gain altogether AND get a big tax deduction.

These are generally the methods we use - with some variation, depending on the details of the transaction. There is a $500 enrollment fee (a tax deductible contribution to the charitable org.)

Wm McGill, Phoenix Consulting

How does this sound? has anyone ever heard of this man or this organization

[tranquility]

There are so many problems with this it would take a long time to go through them. Either you have explained things too summarilly or incorrectlly or it is a scheme.

Only you can tell us which.

[HUD-1]

I wouldn't give them the time of day. First, a seller will most likely not have taxable gains if they have lived in the property for two years. (What seller is going to agree to any of this tax break hogwash anyway? BTW, what do you get out of this deal?) Second, this guy MIGHT be a non-profit. Third, the IRS is currently pulling the tax exempt status on a lot of these so called non-profits. Third, this guy doen't state the legitimate purpose of the non-profit. I suspect the purpose of this "non-profit" is to put money in his pocket. Why do they need a $500 "enrollment" fee? Sounds like a scam to me. Every scam has grains of truth in them.

True non-profits have programs for low/mod income buyers. This isn't one of them. If you want to talk to a local HUD-approved, non-profit housing counselor, contact 800-569-4287. HUD is a Federal agency that approves and monitors non-profit housing counselors.

[zuppinger]

Thanks for your help. I really appreciate it. It sounded like a scam that's why I did not reply and sought advice.

Happy Holidays

[Gadfly]

There are lots of these schemes out there. Some are leagal, most are at best questionable. Your RE agent should be able to sort through possibilities and help you. However your safest bet it to stay away.

[zuppinger]

Thank You And Happy Holidays!