There are several reasons why people make gifts of real estate to support the causes that they care about. The benefits of making a gift of real estate include:
- Supporting a favorite cause.
- Improving liquidity by eliminating expenses associated with property ownership.
- Receiving an income tax deduction based on the fair market value of the real estate.
- Avoiding capital gains tax that you would owe if you sold the real estate.
- Putting an end to other problems, such as tenant issues, that may arise with specific properties.
What Types of Real Estate Can You Gift?
There are several types of real estate that can make an excellent gift to support our cause:
- Personal residence or vacation home
- Income-producing properties such as a rental home, vacation property, or commercial real estate
- Undeveloped land, farm, and agricultural land or ranch land
- Land with significance held to be protected or preserved
How to Make a Gift of Real Estate
Donors can give most real estate types to charity by signing or executing a deed transferring ownership. You can deed all you own and, in some cases, partial ownership of your real property to support our cause. Don’t hesitate to get in touch with us before executing a deed to gift your property, primarily if ownership is jointly held or held in a business entity such as a limited partnership.
Strategies for Gifts of Real Estate
1. Outright Gift
The simplest way to make a gift of real estate is to deed your property outright to charity.
2. Partial Gift and Joint Sale
You can avoid capital gains tax on the part our organization sells. This is an excellent option if you need some cash from the sale of property, such as to pay off mortgage debt. This approach involves giving us an undivided interest in the property and then a joint sale. In addition, you would receive a charitable income tax deduction based on the value of your gift. That deduction could partially or entirely offset any capital gains taxes you would owe from selling your part of the property.
3. Bargain Sale
With this approach, you would sell the property to our organization for less than fair market value. Like the partial gift and joint sale approach, you can avoid capital gains on the difference between the property value and sales price and receive a deduction for that amount. In addition, you receive cash proceeds from the sale.
4. Charitable Remainder Unitrust
With this strategy, you create a special trust and transfer the property to the trust. The trust can sell the real estate without paying capital gains tax and then invest the sales proceeds. The trust will pay you, or you and a loved one, income for life, after which we would use the remainder to support our work. You receive a deduction based on the amount that is given to charity.
5. Retained Life Estate
This strategy provides you with a current income tax deduction for making a future gift of your home, vacation home, farm, or ranch to charity now while allowing you the right to continue to use the property for the rest of your life.
Contact Us
If you have questions about making a gift of real estate or which strategy may be right for you, please get in touch with us. We would be pleased to assist you and answer your questions.