Beyond an Outright Gift: Three Other Ways to Give Real Estate
You may want to explore alternatives to an outright gift of real estate, such as a “bargain sale,” creating a charitable remainder trust or giving through your will.
Make Us a Deal
A bargain sale occurs when you sell real estate that you’ve owned for more than one year to us for less than its current fair market value, subject to our agreement. After we purchase your property, three things happen: 1) you receive a cash payment from us for the sale price, 2) you receive a charitable deduction for the difference between the sale price and the higher fair market value, and 3) we receive the property at a bargain price. You benefit financially, and so do we.
Receive Income for the Rest of Your Life
Another approach to donating real estate is to use your property to fund what’s known as a flip charitable remainder trust. Such a trust can be set up to make lifetime payments to you or any other recipient you name starting after the property is sold. At your death, your charity of choice receives the remainder in the trust.
When you donate property to a charitable remainder trust, you can benefit in these ways:
- Eliminate up-front capital gains tax on the increase in the property’s value since you bought it
- Receive an immediate income tax deduction for the value of the remainder interest
- Receive income from the trust for the rest of your life once the property is sold
- Reduce the cost of probate—the legal process of administering your estate after your death—by eliminating the property from your estate
- Relieve yourself of selling or maintaining your property
- Make a significant gift that we can access after your lifetime
|Calculate how a charitable remainder trust could benefit you.|
Include Us in Your Will
You can also make a gift of real estate in your will. Because a gift in your will is revocable (that is, you can change it at any time during your life), you will not be able to take an income tax deduction during your lifetime, but the property is eligible for a charitable estate tax deduction upon your death. Another option is to bequeath full title to an individual as long as that person survives you. If not, PETA would receive the property.
If you don’t need to make a new will now for any reason, ask your attorney to draw a brief codicil for this purpose.
Share the sample bequest language for PETA with your estate planning attorney:
“I, [name], of [city, state ZIP], give, devise and bequeath to People for the Ethical Treatment of Animals, Inc., federal tax identification number 52-1218336, with the permanent address of P.O. Box 42516, Washington, DC 20015, the sum of $_______ [or describe the real or personal property of percentage of your estate] for its unrestricted use and purpose.”
|Learn more about making a gift of real estate in our free guide.|
If you have questions about any of these additional options for giving real estate, please contact Tim Enstice at 757-962-8213 or email@example.com.