Gifts of real estate can include homes, condominiums, apartments, undeveloped land, farmland, and rental property. Such gifts may help the donor alleviate management costs and responsibilities if the property were held, and capital gains tax and broker’s fee if the property were sold.
When you give gifts of real estate to the Foundation, the Foundation in turn sells the property, and – depending on the amount – contributes the proceeds to an existing fund of your choice or opens (or increases) your own fund with the income from the sale. You receive a charitable tax deduction equal to the fair market value of the property, and you pay no capital gains tax on the sale.
- Outright Gifts
- Trusts – If real estate is used to fund a charitable remainder unitrust or a charitable lead trust, a donor typically avoids the capital gains tax liability on the transfer of the asset to the trust.Bequests – If a donor leaves real property to the Community Foundation by will, estate taxes are substantially reduced as the property is removed from the taxable estate.
- Retained Life Estates – Making an irrevocable donation of real estate while retaining the right to use the property often results in the immediate benefit of a substantial tax deduction. The income tax deduction can mean significant tax savings in the year of the gift and may be carried forward for up to five additional years.
Source: The Essentials of Planned Giving, JOHN BROWN LIMITED, INC; 2nd Edition
CONSULT YOUR TAX ADVISOR FOR THE VALIDITY OF THIS INFORMATION TO YOUR PARTICULAR TAX SITUATION.