Real Estate Gifts

Almost any type of real estate may be donated: undeveloped land, farms, commercial buildings, vacation homes, or your residence.

Outright Gift

You receive a charitable income-tax deduction for the full fair-market value of the unencumbered real estate. You may apply the deduction up to 30% of your adjusted gross income—in the year of the gift—with the five-year carryover provision. You avoid capital-gain tax on the appreciation you have in the property, and there are no gift taxes. Because you have removed the property from your estate, you may also reduce your estate taxes.

Bargain Sale

A donor who wants to recover a portion of the value of the property that he or she wishes to contribute to the UW Foundation may consider entering into a bargain sale transaction. In effect, a bargain sale is a sale of property to charity for less than its fair-market value. The bargain sale price must be any amount mutually acceptable to the charity and the donor.

For example, John Miller, 78, owns a vacation home he no longer uses. He bought the home for $40,000 some years ago, and it is now worth $120,000. He offers to sell it to the UW Foundation for $40,000. As a result, he receives $40,000 from the UW Foundation and can deduct the contributed portion of $80,000 for income-tax purposes. John must also report a capital gain of $26,667. (The reportable capital gain is arrived at by dividing the sale price of $40,000 by the fair-market value of the property—$120,000—and multiplying the result by the gain—$80,000.)

Gift of Personal Residence or Farm with Retained Life Estate

You may give the property to the UW Foundation while retaining the right to occupy the residence or operate the farm. Such a gift of a remainder interest provides a charitable income-tax deduction for the present value of the remainder interest that frees up tax dollars into spendable income—without causing any disruption in your lifestyle. In addition, this plan permits you to escape any potential capital-gain tax on the built-in appreciation.

 

  1. Transfer title to personal residence or farm to the UW Foundation

  2. You (and spouse) occupy and maintain residence for life

  3. The UW Foundation sells property after your death(s)

Benefits of this type of gift

  • Limited out-of-pocket cost for substantial gift to UW Foundation.

  • Federal income-tax deduction for remainder value of your residence or farm.

  • You (and your spouse) can occupy residence for life.