Real estate is one of the most widely-held assets – a personal residence, mountain cottage, beach home, vacation condo, commercial buildings, farmland, timberland, or just undeveloped acreage. It’s a logical gift choice for many Campbell donors.
You may realize that you no longer need the property, or that you use it very little, or that it produces little or no income for you – so there’s no abiding reason to hold onto it. Over time you may have come to realize that upkeep costs such as insurance, taxes, and maintenance and repair costs are causing an unjustified drain on your income. Whatever your reason for choosing to make a gift of real estate, real estate always makes a great gift!
Features & Benefits of Making Gifts of Real Property
Charitable deduction. For federal income tax purposes, the value of your charitable deduction for a gift to Campbell of real estate which you’ve owned for more than one year is the full fair market value of that real estate on the date you gift it.
Avoids capital gains tax. But a charitable income tax deduction is not the only tax benefit you receive by gifting real estate. If the fair market value of such gifted real estate is greater than your cost basis in that real estate, then by gifting it to Campbell you also avoid capital gains tax that would have been levied against such increase in value had you sold the real estate yourself and realized that gain. So, as with gifts of appreciated securities, many Campbell donors sometimes find a gift of appreciated real estate held for more than one year is a better gift than cash!
Deductibility. Gifts of real estate held for more than one year to Campbell are deductible up to 30% of your federal adjusted gross income for the year – and if your gifts of real estate exceed that 30%, then you may deduct the excess over the following five years, again up to 30% of your adjusted gross income for each carry-over year.
Appraisal requirements. If the value of your charitable deduction for your gift of real estate is greater than $500, your income tax return must be accompanied by a completed federal Form 8283/Noncash Charitable Contributions detailing your gift of real estate – we will supply that to you. And if the value of such charitable deduction is greater than $5,000, you must obtain an independent qualified appraisal of your gifted real estate to accompany your Form 8283 in order to substantiate your income tax charitable deduction – we’ll help you get one.
How it’s done. A gift of real estate is made when you execute and deliver to Campbell a deed to that real estate.
About gifting real estate during your lifetime with mortgages against it. You have to be careful making an outright lifetime gift to Campbell of real estate on which you have a mortgage. Campbell cannot assume your mortgage – and most mortgages have a clause in them that say that all sums due from you on the note secured by the mortgage are accelerated if you transfer the property during your lifetime. But… if you’re interested in making such an outright gift of real estate during your lifetime – and that real estate debt is more than five years old and you’ve owned the real estate for more than five years, contact the person whose name appears at the end of this section. Let us help you plan this gift opportunity – we can assist you in finding a Certified Public Accountant to advise you about the exact amount of your charitable deduction generated by this gift. Also, please understand that under current tax laws (and assuming the real estate has appreciated), you will be required to allocate your cost basis in the real estate between the gift portion and the debt portion – and you’ll owe capital gains tax on the appreciation attributable to the debt portion.
About inspections before the gift. Campbell is not exempt from environmental laws and regulations governing real estate. So before we accept any gift of real estate, we must inspect the real estate you wish to gift so that we are satisfied that no potential violations of environmental laws and regulations are present.
Deeding just a remainder interest to Campbell. One of the best ways to generate a large current income tax charitable deduction for yourself – while still retaining complete control and custody of your real estate during your lifetime – is to deed a remainder interest to Campbell in your personal residence, vacation home, or farm. For more information about this gift technique, visit our Planned Gifts webpage.
Contact person. If you have any questions about gifts of real estate, please call Jerry Wood, Assistant Vice President for Institutional Advancement and Planned Giving at 1-800-334-4111, extension 1222.