Charitable Gifts of Real Estate
How to Make a Meaningful Donation
Real Estate can be the ideal asset if you are interested in making a meaningful charitable gift and enjoying substantial tax and financial benefits. In partnership with Rochester Area Foundation's RAF Properties, we can assist you in making a real estate gift into an effective philanthropic strategy.
Some of the most common ways to donate real estate include:
Outright gifts of real property.
Gifts providing income to you.
Outright gifts of real property.
When making an outright real estate gift to RAF Properties, you can take a charitable deduction of the fair market value of the contributed property. This can be taken up to 30 percent of your adjusted gross income --- if the amount is larger than what can be used in one year, the excess can be carried forward for up to five years.
Gifts providing income to you.
Property gifts can be made to a Charitable Remainder Unitrust (CRUT) that pays you an income for life or for a term of years. You avoid capital gain tax and you receive an income tax charitable deduction based on the value of the foundation's remainder interest.
Did you know that you can make a gift of property but retain the right to live in or use that property for life? Life estates are used to make a future gift of a primary residence or vacation home. At death, the property is transferred to Rochester Area Foundation's RAF Properties, avoiding the delay and expense of probate. And, you get to take the income tax deduction now, which is determined by the value of the property, your age and current interest rates.
Many individuals hold interest in real estate through shares in limited partnerships or LLCs with investment in real estate. Gifts of these assets can be arranged to benefit charity and provide tax benefits to you.
You can make a property gift by incorporating a bequest into your will or living trust. Bequests do not generate a current income tax deduction, but they can quality for an unlimited estate tax charitable deduction.
Property gifts to private foundations are valued at the donor's basis only, rather than at fair market value. For fully depreciated property, a gift to a private foundation offers little tax benefit. Instead, you can create a donor advised fund at the Rochester Area Foundation where valuation of real estate gifts is at fair market value.
Important considerations
Real estate is an often-overlooked resource for charitable giving but requires careful planning to execute properly. Key considerations for the foundation include assessing a property's marketability and condition. A donor must secure a property appraisal for tax purposes and the foundation may require an environmental review of commercial and industrial properties. There will likely be costs associated with completing the gift transaction, including legal, title and other costs.
The Rochester Area Foundation promotes philanthropy in the greater Rochester area by administering charitable funds for purposes identified by the donors. We typically work with individuals, families and businesses providing them with objective information and helping them transform charitable intent into effective giving strategies. For more information, email us or contact us at 507.282.0203.