Giving Real Estate
Most people don’t think of using real estate when they consider making a charitable gift, but property such as a house, apartment, condominium or vacation home constitutes a significant percentage of many people’s assets and can also be an important planning tool.
It is helpful to evaluate the following:
- A current, outright gift of real estate would allow your gift to make a difference now and could generate significant tax and other savings.
- As with most charitable gifts, real estate gifts can be tax deductible and may offer a number of personal and financial planning advantages.
- Almost any type of marketable real estate, including a residence, vacation home, a farm, rental or commercial property and undeveloped land, may be given to charity.
- Leaving real estate to a charity through your will or living trust is an efficient way to make a significant future gift without impacting your current living arrangement.
When considering a gift of real estate, keep in mind:
- The property must be readily salable.
- Mortgaged property calls for special attention to the way in which it is given.
- To meet IRS requirements, you will need to obtain an appraisal from a qualified appraiser.
- The exact tax savings depends on the type of gift and your specific situation.
Contact us to discuss the gift you are considering. We will need to determine if a particular gift will work for us, and we will work with you to ensure that the gift meets your charitable and personal objectives. You should also discuss your plans with your financial advisor or attorney.
Giving Real Estate You Continue to Use
You may want to consider ways a primary residence, vacation home or certain farm properties can be used to make a future gift to a charitable organization while enjoying a number of current and future financial benefits.
You can make a gift of your home or farm property now, while having the security of knowing you may live there for the remainder of your lifetime or other period of time you determine. You continue to enjoy the full rights and responsibilities of ownership.
Because you are making an eventual gift for charitable purposes, you are entitled to an immediate charitable income tax deduction for the value of your gift. You continue to maintain the property, pay the taxes and even receive any income it generates. Because you have provided for the future ownership of the property, however, it will not be subject to the possible expense and delay of probate. It will also not be part of your taxable estate, possibly resulting in what may be significant federal and/or state estate tax savings for your heirs.
Planning Tip: During a period of relatively low interest rates, gifts of remainder interests in real estate can be especially attractive. Depending on the time periods involved, charitable income tax deductions can currently be enjoyed in amounts well over 50% of the value of the property donated. This can reduce federal income taxes for the year of the gift and up to five future tax years.
