If you own a home or other property you no longer wish to occupy or manage, and you would like to make a charitable gift, you may find that a gift of such property can be a very efficient way to meet both goals. If you sell real estate you have owned for a number of years, it is likely that you will be faced with a sizable capital gains tax, especially if the property is not your residence. Through an outright gift of such a property, a double tax savings is possible. First, in most cases, you will receive a charitable income tax deduction for the full amount of the property. In addition, you will not be liable for capital gains tax on the transfer, since the property was donated rather than sold.
You may donate a residence or condo, farm or forestland, commercial property, or other real estate as an outright gift or retain the right to occupy the property for life. A gift of a remainder interest in a personal residence or farm gives you a current income tax deduction for the present value of the remainder interest and lets you eliminate any capital gains on the appreciation.
- Example: A married couple ages 83 and 81 donated their interest in a retirement community with an appraised value of $368,000. The couple retained the right to live in the home for the remainder of their lives. The gift with the life estate resulted in a charitable contribution of $245,051. Upon the death of the last to die, the interest in their retirement community home will be sold and the net proceeds will be added to their endowment at the Foundation.
Gifts of appreciated real property held more than one year are generally deductible up to 30% of adjusted gross income. Excess contributions may be carried forward for up to five consecutive tax years. A qualified appraisal is generally needed to substantiate a claim of an income tax charitable deduction with respect to a donation of real estate if the claimed value exceeds $5,000. An appraisal summary — IRS Form 8283 — must also be filed with the federal income tax return on which the gift is first claimed or reported.
Forest Property is a meaningful gift that will benefit the University of Maine for generations through the Foundation’s Green Endowment Program.
Tangible and Intangible Personal Property
Works of art, rare books, antiques, intellectual property and other tangible and intangible property may also make practical and meaningful gifts. Special rules apply to the tax benefits for such gifts. Whether your gift is deductible as well as what the deduction amount will be depend upon how the gift will be used and the appraised value.
The University of Maine Foundation has professional giving officers ready to work with you and your advisors. We may be reached Monday-Friday between the hours of 8 am and 5 pm by calling 1.800.982.8503 or via email at email@example.com.