In a bargain sale, a charity benefits through the purchase of property for less than fair market value or accepts a gift of mortgaged property. This helps those who desire to benefit a charity, but cannot afford to give an entire property to the charity, or who may have mortgaged property they are willing to give to charity.
When executing a bargain sale, donors receive a cash payment or debt relief, avoid gain on the part of the property that is a gift, and receive a current federal income tax deduction for a part of the property given to charity. Bargain sales especially benefit those who own appreciated property and want to give to a charity, but who need a benefit in return (either cash or debt relief).
A bargain sale works just like any other sale except that the sale price is a bargain (less than the property is worth). The donor gets the cash or debt relief he needs, and the charity gets a valuable property for less than full price. (The difference between the sale price and the appraised value of the property is a gift to the charity.)