Donate Real Estate

Donating real estate provides an opportunity to support Shema Kolainu and to enjoy attractive benefits. For example, with a gift of real estate you can potentially receive tax benefits, generate income for yourself, or even continue to live in the house you donate. A gift of real estate demonstrates a deep commitment to Shema Kolainu, and its impact on the organization is significant, helping to secure its future in the coming decades.As you consider a gift of real estate, think about the property you own, then consider the financial and personal benefits that come from donating real estate. Ask yourself the following:

• Do I own a property, such as a vacation home, that I don’t use very often?
• Do I have real estate that is difficult or expensive to manage?
• Will I owe significant taxes if I sell?
• Do I have a substantial taxable income that a gift of real estate might offset?
• Do I have a property that, if donated, would provide me with income?

If you answered, “yes,” to any of the questions above, you can benefit by gifting property to Shema Kolainu.

Top Reasons Why Friends Donate Property

Friends donate property to Shema Kolainu as a significant way to support the organization. But they also know they will receive attractive financial benefits as a result of the gift.

Depending on the nature of your gift and on your needs and objectives, you can potentially:

• Avoid capital gains taxes due on the sale of property.
• Reduce your income taxes.
• Reduce your estate taxes.
• Receive an annual income.
• Donate your home, and continue to live in it for life.
• Eliminate the burden of maintaining and paying for property.
• Avoid real estate transfer taxes.
• Support Shema Kolainu in an alternative way.
• Create a significant legacy.

Types of Properties That Can Be Donated

Almost any type of real estate, domestic or international, can be offered for donation. Examples of properties include:

• Single-family homes
• Apartments, condominiums and cooperatives
• Multi-family homes
• Second homes
• Vacation homes
• Land
• Commercial properties, such as office buildings, shopping centers, and farms
• Hotels, motels and resort properties

Five Popular Ways to Donate Property

There are many ways to gift real estate to Shema Kolainu, each with its own advantages. Five of the most popular ways to donate property are listed below.

1 . Outright Gift: You can receive a charitable deduction equal to the fair market value of the property when you donate it outright to Shema Kolainu. You can also avoid paying capital gains taxes and need not be responsible for the property taxes, maintenance and general upkeep after the donated property is sold.

How It Works
The donor transfers the property to Shema Kolainu.

Objectives Met
You can eliminate the burden of maintaining a property that is no longer wanted or needed.

Donor Benefits
You can potentially:

• Receive a charitable tax deduction for the full appraised value of the property.
• Avoid capital gains taxes.
• Remove property from your taxable estate.

An Example
Mrs. Miller owns a home that cost $100,000 and is now worth $300,000. When donated, Mrs. Miller gets to take a tax deduction of $300,000 and avoids paying capital gains taxes. In addition, the property will not be part of her taxable estate.

 

2. Charitable Remainder Trust: You can establish a trust and use proceeds from the sale of the donated property to provide an annual payment for yourself and your spouse for up to 20 years or life. You can also receive a charitable tax deduction for a portion of the property’s value.

How It Works

• The donor transfers the property to a Charitable Remainder Trust.
• The trustee sells the property and the proceeds are received by the Charitable Remainder Trust.
• The donor receives an income payment for a set period of time, often for the life of the donor and spouse.
• Upon the donor’s death, the trust’s assets are transferred to the organization.

Objectives Met
You can diversify your assets and benefit from additional income.

Donor Benefits
You can potentially:

• Receive an annual income.
• Receive a charitable tax deduction for a portion of the property’s value.
• Avoid capital gains taxes.
• Remove the property from your taxable estate.

An Example
Mr. Adler donates a 50-acre parcel of land which the trustee of the Charitable Remainder Trust sells for $500,000. The proceeds are received and invested by the Charitable Remainder Trust. Mr. Adler receives an annual payment for an agreed upon amount for up to 20 years, or for his and his spouse’s life.

 

3. Retained Life Estate: You and your spouse can live in your house for life. When you give title of the property to Shema Kolainu, you can receive a charitable tax deduction for a portion of the property’s value.

How It Works
The donor transfers ownership of the property to Shema Kolainu, but retains the right to live in the property for a specified period of time – often for the life of the donor and spouse.

Objectives Met
You and your spouse can continue to live in the donated property for life.

Donor Benefits

You can potentially:

• Receive a charitable tax deduction for a portion of the property’s value.
• Avoid some capital gains taxes.
• Remove the property from your taxable estate.

An Example
Mrs. Meyer donates her home to Shema Kolainu, but continues to live in it. She receives a tax deduction and avoids some capital gains taxes. On her death, Shema Kolainu sells the home. The property has been taken out of her taxable estate, thus reducing inheritance taxes for Mrs. Meyer’s heirs.

 

4.   Bargain Sale: When you sell a property to Shema Kolainu for less than its appraised value, you may receive attractive tax benefits. This method is often selected for a property that has an outstanding mortgage or that has been owned for less than 12 months.

How It Works
Donor sells the property to Shema Kolainu for less than appraised or fair-market value, often for the cost of an outstanding mortgage.

Objectives Met
You can eliminate the burden of mortgage payments, taxes and other maintenance.

Donor Benefits
You can potentially:

• Receive a charitable tax deduction based on the difference between the Bargain Sale price and the appraised value.
• Avoid some capital gains taxes.
• Remove the property from your taxable estate.

 An Example

Mrs. Rogers sells a multi-family home to Shema Kolainu for $180,000, the price she paid for it years ago. At the time of her gift, the property is worth $400,000. Her charitable contribution is $220,000 – the difference between the current value and the sale price. Her capital gains taxes are reduced and she receives a $220,000 charitable deduction.

 

5.  Bequest: By leaving property to Shema Kolainu in your will, your estate receives the benefit of an estate tax deduction for the amount of the gift.

How It Works
The donor bequeaths the property to Shema Kolainu in his or her will. 

Objectives Met
You and your spouse can continue to live in the property for life. 

Donor Benefits
Your estate can receive the benefit of a charitable tax deduction.

An Example
Mr. Stone bequeaths the home he has lived in for 30 years to Shema Kolainu. Upon his death, the property is given to Shema Kolainu, which sells the property and uses the proceeds as he directed.

To learn more about the personal and financial advantages of donating real estate, or to request a complimentary copy of The Benefits of Donating Real Estate, contact Joshua Weinstein.

He can be reached by phone at (718) 686-9600, ext 107, or by email at jweinstein@skhov.org

 

NOTE:
The examples above are based on applicable tax regulations, which can change and a number of simplifying assumptions (e.g., that the property involved would generate long-term capital gains). We recommend speaking with your legal and financial advisors about your planned gifts and the state and federal tax implications.

If you are interested in other giving opportunities, please contact Joshua Weinstein at (718) 686-9600, ext. 107 or jweinstein@skhov.org