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A gift of appreciated, unmortgaged real estate can sometimes be more beneficial than a cash gift.
For example, if you purchased property several years ago for $150,000, and its current value is $500,000, you will have a long-term capital gain of $350,000. If you make an outright gift of the property to a charitable organization, you would receive an income tax charitable deduction of $500,000 (the full value of the property), and eliminate a possible capital gain tax on the $350,000 of appreciation in the property. Not least of all, you also remove it from your final estate evaluation, possibly eliminating or greatly reducing estate taxation.
If you would like to continue to use the property you want to contribute, simply donate it now but retain the right to use it for life, or for a specified number of years. Technically, this is called a "retained life estate," and it still gives you tax benefits. You’ll have a significant charitable deduction in the year you gift the property, plus you’ll avoid all possible capital gains tax. Also, once again it is removed from your estate, possibly eliminating or greatly reducing estate taxation.
Here’s another option: If you would like to donate your home and you do want to move out, you can receive lifetime payments in return for donating it to ORT America through a charitable remainder trust. When you transfer unmortgaged property to a charitable remainder trust, the trustee can then sell it, invest the proceeds in income-producing securities and pay you a regular income with many flexible options. You’ll still get a substantial charitable deduction, and ultimately the trust remainder will be distributed to ORT America to help support our mission.
ORT America has several Planned Giving programs that can be tailored to your individual financial needs. If you are interested in discussing this very important topic, please contact Senior Director of Planned Giving Hugh Williams at 800.519.2678, ext. 226, or e-mail plannedgiving@ortamerica.org.
If you are interested in developing a personalized gift plan and want to discover which gift options are right for you click here and follow ORT’s Gift Guide.
This information was prepared as an educational service and is not intended as legal, tax or financial advice. Donors should obtain legal, tax and financial opinions from their own professional advisors.
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