Gifts of Real Estate
If you've owned your home or other real estate for a long time, it may have significantly increased in value. This appreciated value or capital gain is generally subject to federal and state taxes. It also represents a significant giving opportunity.
Before you sell any real estate holdings, consider the tax benefits that may be available by donating the property to The Servants of Mary. You can give the property outright, place it in trust or give it by will.
Giving Real Estate by Bequest in Your Will
If making an irrevocable gift of the property is not right for you, consider giving it to us in your Will. Because your Will is revocable (you can change your mind at any time during your life), you will not be able to take an income tax deduction, but the property will not be taxed in your estate.
If you wish, you can give another person life use before unrestricted ownership passes to us. Or you can bequeath full title to an individual if that person survives you, with our organization as the contingent recipient. When an individual is given life use, it is best to make it clear that he or she is responsible for maintenance, insurance, repairs and improvements.
If you don't need to make a new will now for any other reason, ask your attorney to draw a brief codicil for this purpose.
Benefits of Real Estate Gifts
•An outright gift offers valuable income and estate tax deductions, and tax on the capital gain may be avoided.
•A gift in your Will generally assures that the value of the property will qualify for a charitable deduction for estate tax purposes.
•Giving us outright use of the property now will free you from the responsibilities and costs of looking after it.
What Property is Right to Donate
Farm land tends to produce a low return on its market value. This is especially true of absentee-owned land, where the owner's profit is often reduced by tenant shares and farm manager's fees. Moreover, the profitability varies, depending on the weather and commodity markets, making this type of land suitable for a charitable gift in exchange for a life income arrangement.
Undeveloped property, such as vacant land, has a cost of ownership (property taxes and insurance, for example) with no offsetting return. And a vacation home that is no longer used enough to justify the investment, costs and responsibilities may be suitable as a gift.
Also, not all property automatically rises in value. So property that has lost value or depreciated may be worth as much today in terms of the charitable income tax deduction from an outright gift, as it is likely to be worth in the future. Or it may be used to fund a charitable remainder trust paying an income for life. And developed investment or commercial property may provide significant capital gains tax savings when used to make a gift and avoid potential depreciation recapture as well.
It is also important to understand that, while The Servants of Mary appreciates the generosity of all its donors, the receipt of any gift of real property must be individually assessed by The Servants of Mary to ensure that the potential gift is suitable to advancing the organization’s religious mission and ministries. For more information on the suitability of, or procedures for, making a gift of real property to The Servants of Mary, please contact the Development Director at 800-778-4000.