Giving Real Estate

You may donate your personal residence, all or part of your vacation residence, commercial property, farm or other real estate either as an outright gift or as part of a life-income plan.  Tax savings and other benefits will vary according to the method you choose, your personal circumstances and the value of the property.
 

Methods of Giving Real Estate

Outright gifts

• As always, the simplest form of transferring any property (real or otherwise) is the outright gift.  If the property has been held for more than 12 months, you are entitled to a deduction for the full fair market value of the property.  In addition, any appreciation in the property will not be taxed as a capital gain.
• The value of long-term capital gain property is generally deductible up to 30 percent of your adjusted gross income, with any excess available to be carried over and deducted (subject to the same limitation) over the next five years.
• If the property you select has depreciated, it is usually to your advantage to sell the property and establish your tax loss, and then donate the proceeds of sale, since any tax deduction is limited to the fair market value of the property and the tax loss may offset any taxable gains.
  

A life estate gift

• This may consist of a gift of your personal residence, vacation home, yacht or other property used as a residence (not necessarily your principal residence) or farm (which is any land used by you for production of crops or sustenance of livestock) while retaining the right to live in or otherwise use the property for your life. While you continue to be responsible for the upkeep, insurance, and taxes on the property, you are entitled to a charitable contribution deduction for the value of your gift, the amount being dependent upon the property's fair market value and your age at the time of transfer. You may also wish to consider a gift of a fractional or partial interest in such property.
  

A bargain sale gift

• This may be an attractive way to make a gift of property where the value of the property is greater than the amount you wish to give and it is not practical or economical to divide it. The property is sold to the College at less than its fair market value. The difference is the amount of your charitable contribution deduction. If the sale/gift is of appreciated property, a portion of the potential gain will be subject to tax. Acceptability of bargain sale gifts from the College's point of view depends, of course, on the marketability of the property, the amount of the bargain and the availability of funds to make the purchase.
  

Unitrust option

• Highly appreciated real estate is an excellent choice for funding a charitable remainder unitrust. You can avoid the capital gains tax, receive an income tax deduction, and generate a new income flow once the property is sold and converted to income-producing investments.
  

Appraisal Requirements

Charitable contribution deductions for gifts of property (other than cash or publicly traded securities) with a value in excess of $5,000 must be substantiated by a "qualified appraisal."  These requirements are in addition to those generally required to document any deduction claimed for tax purposes, and must be observed in order to support the deduction of such property.  The Gift and Estate Planning staff is available to assist you in understanding these requirements.
 

Environmental Review

In light of current liability concerns, the College requires an environmental review of most gifts of real estate.