Planned Giving Opportunities
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 win 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, 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.
Please note, individual financial
circumstances will vary. The information on this site does not
constitute legal or tax advice. As with all tax and estate planning,
please consult your attorney or estate specialist. All material
is copyrighted and is for viewing purposes only. Use of this
site signifies your agreement with the terms
of use. The content in this Planned Giving section
has been developed for Methodist Children's Home by Future
Focus. Please report any problems to section
webmaster. Revised: October
22, 2004 22:57.
