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Advantages of Giving Real Estate When you consider making charitable gifts, you have many options as to what you contribute. You can give cash, stocks, bonds, collectibles, land, buildings or virtually anything of value. The choice of what property to contribute depends on your personal goals and circumstances. However, in making this choice, you should be aware of the special incentives Congress has created to encourage certain forms of private philanthropy, especially gifts of real estate. Benefits of giving real estate may include: • Reduced income taxes An immediate gift of appreciated real estate can generate income tax benefits that will reduce substantially the after-tax cost of the gift. Generally, a person who makes a gift of real estate held for more than one year is entitled to an income tax deduction equal to the full value of the property contributed. In addition, the donor escapes capital gains tax on the profit that would have been taxable if the property had been sold. The donor may also save estate taxes because a lifetime gift of real estate removes the property from estate tax. You may prefer to leave real estate through your will, retaining all the rights and privileges of ownership during your life. If you own your home or farm – or even a vacation home – you additionally can make an immediate gift of the property, obtain an immediate income tax deduction and still continue to use the property for the rest of your life (or for the lives of you and another). Ask us for an illustration. An ideal way to use real estate to accomplish your financial objectives and make a gift as well is to set up a charitable remainder unitrust. This is a trust in which you irrevocably place property, but retain a specified income, usually for life. At the end of the trust, the trustee distributes the property to one or more organizations. But because you set up the trust now, rather than leave the property through your will, you are entitled to a substantial income tax charitable deduction.
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