Goal: Avoid capital gains tax on the
sale of a home or other real estate
Benefit: A charitable tax deduction and potential diversification with the possibility of reducing or eliminating capital gains tax
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."
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
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). A bargain sale may be used to provide funds to the donor using a part sale, part gift. In any case, while we discuss
some generalities here about donating real estate, if you are considering
such a gift to Saint Joseph's College, please contact
us to discuss its suitability.
In addition to making a significant contribution, there can be other benefits
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
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
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.
Return to the Legacy Giving home page or to Legacy Giving Options.
For more information or a confidential discussion of your charitable options, please email or call the Vice President and Chief Advancement Officer, Joanne Bean, at 207-893-7891.
Please note, individual financial circumstances
will vary. The information on this site does not constitute legal or tax advice, either in whole or in part. Donor stories and photographs are for purposes of illustration
only. 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 Legacy Giving section has been developed
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