Beyond an Outright Gift: Other Ways to Give Real Estate
You may want to explore alternatives to an outright gift of real estate, such as a "bargain sale," a retained life estate, creating a charitable remainder trust or giving through your will.
Make Us a Deal
A bargain sale occurs when you sell real estate that you've owned for more than one year to us for less than its current fair market value, subject to our agreement. After we purchase your property, three things happen: 1) You receive a cash payment from us for the sale price, 2) you receive a charitable deduction for the difference between the sale price and the higher fair market value, and 3) we receive the property at a bargain price. You benefit financially, and so do we.
Give Your Home But Live There for Life
Many of our supporters can't imagine living anywhere else but their current homes. Many would also love to make a major gift to Muhlenberg College but don't have the means to make such a gift today. If this sounds like you, you may want to consider a charitable giving arrangement called a retained life estate.
With a retained life estate, you deed a personal residence or farm to Muhlenberg College now. You retain the right to occupy the home for life and continue to pay real estate taxes, maintenance fees and insurance on the property. In addition, you can later decide to rent your home or make improvements to it. After your lifetime—and the lifetime of your spouse or another person you choose to retain rights to live in the home—we take possession of the property.
With a retained life estate, you can benefit in these ways:
- You get the satisfaction of using your home to make a significant gift to Muhlenberg College while retaining the right to live there for life.
- You qualify for a sizable income tax deduction in the year the gift is made. The amount of your tax deduction is based, in part, on your age and the value of the property.
- You can immediately deduct the amount of your gift up to 30 percent of your adjusted gross income and carry over any unused deduction for up to five additional years.
- The gift isn't subject to capital gains tax.
- The property gift eliminates federal estate tax as long as the life estate was created for you and/or your spouse.
- If at any point you no longer wish to occupy the property, you can rent it to provide you with an additional source of income. Or, you can give Muhlenberg College the right to use the property for the rest of your life. This will provide you with yet another tax deduction.
|Calculate your possible benefits for arranging a retained life estate with us.|
Receive Income for the Rest of Your Life
Another approach to donating real estate is to use your property to fund what's known as a flip charitable remainder trust. Such a trust can be set up to make lifetime payments to you or any other recipient you name starting after the property is sold. At your death, your charity of choice receives the remainder in the trust.
When you donate property to a charitable remainder trust, you can benefit in these ways:
- Eliminate up-front capital gains tax on the increase in the property's value since you bought it.
- Receive an immediate income tax deduction for the value of the remainder interest.
- Receive income from the trust for the rest of your life once the property is sold.
- Reduce the cost of probate—the legal process of administering your estate after your death—by eliminating the property from your estate.
- Relieve yourself of selling or maintaining your property.
- Make a significant gift that we can access after your lifetime.
|Calculate how a charitable remainder trust could benefit you.|
Include Us in Your Will or Trust
You can also make a gift of real estate in your will or living trust. Because a gift in your will or trust is revocable (that is, you can change it at any time during your life), you will not be able to take an income tax deduction during your lifetime, but the property is eligible for a charitable estate tax deduction upon your death. Another option is to bequeath full title to an individual as long as that person survives you. If not, Muhlenberg would receive the property.
If you don't need to make a new will or trust now for any reason, ask your attorney to draw a brief codicil or trust amendment for this purpose.
The official bequest language for Muhlenberg College is:
"I, [name], of [city, state, ZIP], give, devise and bequeath to Muhlenberg College [written amount or percentage of the estate or description of property] for its unrestricted use and purpose."
|Learn more about making a gift of real estate in our free guide.|
If you have questions about any of these additional options for giving real estate, please contact Robert A. Merritt at 484-664-3224 or firstname.lastname@example.org.
Getting Started | Is This Gift Right for You? | Case Study | How to Complete Your Gift | Beyond an Outright Gift | Action Items
Copyright © The Stelter Company, All rights reserved.
The information on this website is not intended as legal or tax advice. For legal or tax advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes apply to federal taxes only. State income/estate taxes or state law may impact your results.
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