Rates Going Up

The §7520 rate for April is 2.6%, the highest since June 2011, when the rate reached 2.8%.  The rates affect the deductions for various split-interest gifts.  The chart below shows the various charitable split-interest gift techniques and which interest rate, highest or lowest, will give the most favorable charitable deduction.  Donors may choose the rate from the month of the gift or either of the two prior months, whichever is most favorable.

Gift technique

Strategy

Charitable remainder annuity trust

Elect highest §7520 rate

Donor terminates trust, giving life income interest to charity

Elect lowest §7520 rate

Charitable remainder unitrust

Elect highest §7520 rate

Donor terminates trust, giving life income interest to charity

Elect lowest §7520 rate

Charitable gift annuity

 

Larger deduction

Elect highest §7520 rate

Large tax-free payout

Elect lowest §7520 rate available (this may be the best option for nonitemizers)

Donor makes gift of remaining annuity payments due

Elect lowest §7520 rate

Remainder interest in home or farm

Elect lowest §7520 rate

Donor gives remaining life estate

Elect highest §7520 rate

Charitable lead annuity trust

Elect lowest §7520 rate

Charitable lead unitrust

Elect lowest §7520 rate


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