Are you looking to downsize in preparation for retirement? Are you interested in including a donation in your estate plan? There is a way you can do both.
When you donate a piece of residential real estate through your estate, you avoid certain taxes and significantly benefit your overall estate. The charity benefits and so do you.
What are the benefits of donating through your estate?
Instead of donating cash proceeds, real estate donations can make a larger impact. When you make a real estate donation to a public charity, it is considered a gift instead of a sale. This means it can be tax deductible and eligible for other benefits. These include the following:
- Apply a tax deduction based on the appraised fair market value
- Eliminate capital gains tax on the appreciation of the property
- Creating a dedicated charitable fund as part of your estate plan
What’s more, the physical gift of your real estate could mean more than the money it raises. It could become a safe haven for abused or battered women, a halfway house for victims of human trafficking, or a number of other
What are important things to consider?
Like all real estate decisions, you should carefully consider your options. Your financial advisor and the charity’s advisor might determine a different path that could be better for the charity. The following are other things to keep in mind around the donation of real estate:
- Your donation will probably need to be paid off in full
- Your donation is irrevocable. The charity will control the sale.
- Your donation might be subject to due diligence investigation.
If you would like to make this kind of donation to an accredited charity, a legal or tax professional can help you navigate this option.