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Case Study
The following is an illustration of how this type of donation works.
Tom has never been able to resist the ocean. After years of vacationing on the coast with his wife and three daughters, 18 years ago Tom decided to make one of his lifelong dreams come true by purchasing a second home near the ocean.
The property he bought for $200,000 is now worth $400,000. Wanting to make a difference at a qualified charitable organization, Tom (now 83) discovered that he could make a charitable gift of his vacation home and continue to use, for the rest of his life, the home he has grown to love.
How It Works
By deeding his vacation home now and retaining a life estate, Tom will obtain a sizable charitable income tax deduction this year—based on his age and the current value of his property. In addition, he retains the right to use his vacation home at any time and is responsible for maintenance, insurance and property taxes.
The Tax Benefits
Based on the market value of the property (the house: $300,000, and the land: $100,000) and Tom's life expectancy, his certified public accountant determines his income tax deduction to be in excess of $330,000.1
If you have questions about arranging a retained life estate with Hope International University, please contact Michael Mulryan at 714.879.3901 x2323 or mdmulryan@hiu.edu.
1Based on a 1.4 percent charitable midterm federal rate.
Getting Started | Is This Gift Right for You? | Case Study | How to Complete Your Gift | Changing a Life Estate | 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.
