Gift of Appreciated Real Estate

The simplest donation of real estate is the outright gift of property, made now, to a charitable organization. The motivation in this instance is to see the legacy of your nonprofit continue for years to come.

Say twelve years ago, Mr. and Mrs. Williams bought a vacation condominium for $130,000, and now it’s valued at $280,000. (Lucky them.) They no longer use the property. In addition, they’ve long admired the work of a certain charity. Voila! The Williams decide to donate the condo to their charity. For doing so, they’re entitled to a charitable tax deduction of $280,000 from their current taxable income. In their income tax bracket of 35%, they’re going to save $98,000 of incomes taxes. That’s not petty cash. This charitable tax deduction is available in the year of the gift and for an additional five tax years. They won’t pay any costs to sell the property and won’t pay any capital gains taxes on the appreciation. The property will no longer be part of their estate and, therefore, won’t be subject to federal estate taxation. Talk about a win-win situation.