| Gifts
of Real Estate Eileen and her husband, Paul, enjoyed their house.
They had raised their three children there and had many family memories. But after
Paul passed away suddenly, Eileen began to find that the old house was a burden.
Without Paul to take care of things and with their children involved in their
own families miles away, it seemed that the house was too big, too old and even
a bit lonely.  Eileen:
"Paul always said that I was the solid one. If there was a decision to
be made I could get to the bottom line pretty quickly. Well, the bottom line was
that I needed to make a change for a number of reasons. I decided to move into
a smaller place in town, easier to take care of and one that was part of a neighborhood
where I could make some new friends and be a part of activities and things. And
where my grandchildren could still come and visit."
"Paul and I
had talked about what to do when we got to this stage in our lives. I just thought
Paul would be here with me, but that wasn't to be. We had planned and knew I would
have enough money to live comfortably. Initially we thought I'd need the money
from the sale of the house, but I really don't." "My advisor went
over the numbers with me. If we sold it, there would be a large capital gain and
taxes to pay. But by putting the house in a trust that then sells it, I avoided having to recognize the taxable capital gain right away. The trust takes all the money from the sale of the house and invests it, and I get the income
from the trust for life. Then, an organization that is doing great things will
receive the remainder of the trust and that will even save some estate taxes."
 Depending
on the circumstances that are involved, gifts of real estate can be an effective
means of planning a gift. Much of the individual wealth in America is invested
in real estate. While the first thought often is a home or farm, real estate also
can involve a vacation or second home, an apartment or commercial building, a
shopping center, or undeveloped land.
Often our real estate holdings, be it our house, a second home or investment property, are a significant part of our
net worth. Gifts of real estate, therefore, can enable us to make significant
contributions. Each piece of property and its unique circumstances need to be
reviewed to determine the suitability of the property as a gift. Generally speaking,
a rule of thumb is that an acceptable piece of property is one that can be readily
sold. Also, there are many ways to donate property. It can be an outright
gift, a retained life estate, or placed
in a trust (such as what Eileen and her advisor set up). In any case, while
we discuss some generalities here about donating real estate, if you are considering
such a gift to CSUB, please contact us to discuss
its suitability. In addition to making a significant contribution, there
can be other benefits for you: - There may be a charitable income tax
deduction that would lower your income tax.
- If your property has appreciated
in value since you acquired it, there might be a large capital gain tax that would
result if you sold it. By donating the property, you may be able to avoid realizing
the capital gains.
- Depending on your state regulations, you may be able
to turn the property into a gift that is structured to provide income for you
and a beneficiary.
- If the property is your home or farm, you may be
able to make a gift of it now and continue to live in it for the rest of your
life and receive tax benefits the year of the gift.
- If the contribution
from your property exceeds the allowable charitable deduction limits, the deduction
may be carried forward for five years.
There can be significant advantages
to using property as a charitable gift. Please contact
us to discuss your unique circumstances. |
