Real estate gifts include gifts of a residential home, vacation home, commercial property, investment property, undeveloped land, agricultural property and timberland. These valuable assets — if they can be sold immediately after donation — can be extremely helpful to our work in the community. If the real estate has been owned for more than one year and has no debt, these gifts entitle the donor to attractive tax benefits: income tax deduction, capital gains tax avoidance or reduction, and substantial estate tax savings. Real estate can be used for various types of gifts to BCF:
- Outright donation: You can deed property to BCF during your lifetime and receive a charitable income tax deduction.
- Bequest: You can make BCF the beneficiary of the property in your will, living trust or transfer-on-death deeds and your estate enjoys a charitable estate tax deduction.
- Charitable Remainder Trust (CRT): You can fund your CRT with appreciated real estate and enjoy a charitable income tax deduction, capital gains tax avoidance, an estate tax deduction and an income stream for the life of the income beneficiaries.
- Charitable Lead Trust (CLT): You can fund your CLT with real estate that either produces enough rental income to meet the CLT payout to charity or the real estate is sold and reinvested in the trust and makes annual payouts to charity. You receive a substantial gift or estate tax deduction.
- Retained Life Estate: If you are senior donor with enough other assets to live on, you can deed your home, farm, or vacation property to BCF and retain the right to continue to live or utilize the property for the rest of your life. You get a substantial income tax deduction on the year of the donation, but you are responsible for maintenance, insurance, and real estate taxes while you live in the property.
- Bargain Sale: You sell property desired by BCF for less than its fair market value. You get a charitable income tax deduction for the difference between the appraised fair market value and the discounted sales price and you also enjoy a reduction in your capital gains tax liability.
Real estate can be a highly valuable asset to donate to BCF. However, because real estate management is not a core mission or capability of our organization, which operates with a very lean staff, BCF needs to consider multiple factors before accepting a gift of real estate. These include but are not limited to:
- Gift Acceptance Policy: Does the property meet the requirements of our Gift Acceptance Policy?
- Title considerations: Is the title held clear and free? How is the title held? Is this a full interest or partial interest gift? Are there liens on property? Is there debt associated with property? Is there a title report that describes previous ownership, property use, and zoning?
- Environmental considerations: Does the property inspection reveal issues of concern, such as dying vegetation, asbestos, lead paint, hazardous waste, or other troubling observations? Are Phase I and II environmental reviews necessary?
- Marketability: How marketable is the property based on the analyses of real estate professionals? How is the property zoned? Are there zoning variances, violations, or special permits? Are there any restrictions, easements, or assessments?
- Maintenance costs: Are the costs associated with maintaining the property prior to sale — condominium fees, real estate taxes, utility bills, assessments, etc. — so burdensome for BCF that they may outweigh the benefits of the gift?
We would be grateful to discuss your potential real estate gift in person. Please give us a call.