Gifts of Real Estate
Outright Gift of Real Estate
An outright gift of a parcel of appreciated land or other real estate is frequently the most advantageous method of giving, and is immediately available to support the charity of your choice, or fund a gift annuity or charitable trust.
Outright gifts of long-term appreciated property received the following favorable tax treatment:
No Taxation on capital gains.
Reduction of your taxable estate by the value of the gift.
An income-tax charitable contribution deduction for 100 percent of the fair market value of the property as the date a valid deed is delivered to the Foundation.
Your actual income tax savings will depend on your income tax bracket.
Since the deduction comes "off the top," it removes the most heavily taxed
income. The amount of the chariable deduction that can be used in any
one tax year for a gift of appreciated property is limited to 30 percent of adjusted gross income for that tax year. If you cannot deduct the entire amount in the year the gift is made, the excess can be carried over for up to five succeeding tax years.
Outright Bequest of Real Estate
An outright gift or specific real estate to the Foundation, through your will, establishes a 100 percent charitable deduction for estate tax purposes, with no limit on the amount.
Depending on the size of your taxable estate (total value minus final cost and any marital deduction), the tax savings from the charitable deduction reduce the net cost of the gift to you and increase the total amount available for your chariable interests.
The larger the taxable estate, the greater the"discount" on the net cost of a gift by will, because federal estate tax rates are "progressive" - that is, they rise sharply as the tax of the taxable estate increases. These rates are subject to change by Congress. Consult your tax advisor about the current estate tax.
Estate taxaction is increasingly important, especially in Indiana and other agricultural states. The lifelong farmer or investor in land who has always been "cash poor" (putting all available funds into equipment, supplies, and more land) finds it difficult to comprehend the size of his or her resulting estate and the seversity of the eventual tax.
Although a charitable gift by will provides no current income-tax advantages, it can be a wise choice. It can often be accomplished by a simple codicil to an exisiting will.
If the eventual use of the fund created by a bequest of real estate is to be restricted to a specific purpose or program, it is important to consult with the Parke County Community Foundation to ensure that the bequest wording is appropriate and the fund or its income can always be used effectively.