Charitable gifts of real estate are a significant way to fund the mission
of the church while complementing your financial situation. You can donate a
house or property you no longer wish to live in or manage, or donate a
residence and maintain use of it for yourself or loved ones. You can even give
a gift of real estate that will generate additional income.
Properties you can donate include your personal residence, second house,
vacation properties, single-family or multi-unit rental properties, commercial
properties, undeveloped land, and farms.
Giving a gift of property can have excellent tax benefits. Typically, the
current value of the property donated is tax deductible. Plus, because the
property is a charitable gift, there are no capital gains taxes for any
increase in value since it was purchased. See the table below to compare the
benefits of gifting a property or selling it.
| |
Sell property and contribute proceeds |
Contribute property directly |
|
Real estate value |
$75,000 |
$75,000 |
|
Capital gains tax* |
$15,750 |
$0 |
|
Amount of gift |
$59,250 |
$75,000 |
|
Income tax savings based on contribution* |
$20,145 |
$25,500 |
|
*Assumes 28% federal income tax, 15% federal capital gains tax, and
6% state tax |
How to Give Real Estate
Following are a variety of ways to gift real estate to assist in
funding the mission of the church.
Outright gifts of property directly to the church result in
immediate resources for funding the mission and creates an income tax
deduction. For example: If someone purchased a property twenty years ago for
$30,000 that is valued at $80,000 today, donating the property gives them an
$80,000 deduction on that year’s income taxes. Depending on the situation
and tax bracket, this could save a person more in taxes than the cost of the
original investment.
Bequest the real estate as part of your estate plan, resulting in an
estate tax deduction.
Bargain sales combine a gift with a sale. With this method
you receive a tax deduction based on the value of the gift portion, reducing
capital gains taxes, and you receive cash from the sale.
Life estates allow you to gift your house or farm and retain
rights to use the property throughout your life. This results in an immediate
income tax deduction and excludes the value of the property from your estate
when determining estate taxes.
Charitable Gift Annuities and Charitable
Remainder Trusts are tools that allow you to gift property and receive
income for life or a specified number of years. You also receive an income tax
deduction and avoid capital gains taxes from sale of the property.
Charitable Lead Trusts can be used to gift the proceeds from
a property to the church throughout your life or for a specified number of
years, then return the property to the family. This can reduce or eliminate
estate taxes.
Other Considerations
When giving real estate as a gift, the donor is generally required to
obtain an appraisal to determine the value of the gift. Current policy does
not allow the church to pay for the appraisal. In addition, some situations
require a Phase I environmental assessment. These can be time consuming and
result in delays, but are extremely important for the benefit of everyone
involved.
Gifts can be made for the benefit of the World Church and/or subsidiary
jurisdictions. If you wish to convey real estate to the church, contact Estate
and Financial Planning at efp@CofChrist.org
or 1-800-884-7526 (1-877-526-7526 in Canada) for assistance with title transfer.
