REAL ESTATE GIFT

Quite often families have real estate for sale that has appreciated significantly in value - residential property, vacation property, farmland, or commercial property. Prior to the sale of the real estate, it is possible to make a gift to the Society through an undivided interest in the property. Upon the sale of the property, the Society's attorneys attend the closing proceedings along with the majority owner. The title company writes a check to the Society for the value of their ownership in the property, and the donor receives a charitable tax deduction for the current fair market value of the property given to the Society. No capital gains taxes are levied on the appreciated value of the property given to the Society. The Society could then dispose of the real estate as they wish. However, if the property is sold lower than the appraised value within three years of the gift, there are donor tax consequences.

Example:
Mary gives the Society a vacation cottage she no longer uses. It originally cost $50,000 but is now worth $150,000. She gets a $150,000 charitable deduction, which represents a tax savings of $42,000 in her 28% tax bracket. She also completely avoids tax on the $100,000 of appreciation. Now she no longer has to maintain the cottage, and the property will not be taxable in her estate.