REAL ESTATE

Three Ways to Give Real Estate

It’s advantageous to give real estate that has appreciated in value because you receive a tax deduction for the current value of the property and you can avoid the capital gains tax on the appreciation of your property. To qualify for this double tax benefit, you must have owned the property for more than one year.

1. Make an outright gift of your property to the SSMO Foundation.
In exchange, you can make an important gift to benefit the Sisters, deduct the appraised value of the property on your income tax return and avoid capital gains tax.

Example: Mark purchased a property as an investment over twenty years ago. At that time, it was worth $50,000. It is now valued over $200,000. If he sold it himself, he would have a taxable capital gain of $150,000 ($200,000 minus $50,000). At a federal tax rate of 15%, he would have to pay $22,500 in capital gains taxes (15% of $150,000).

IF MARK SELLS IT
Sales Price	$200,000
Other Sales Expenses	(15,000)
Capital Gains Taxes	(22,500)
Cash to Mark	$162,500

Conversely, if Mark donated the property to the SSMO Foundation, he would receive an income tax deduction based on the appraised value of the property. In a 25% tax bracket, that would save Mark $50,000 in taxes. If Mark cannot use the entire deduction in one year, he can carry it forward for an additional five years. He also avoids paying $22,500 in capital gains tax. In total, the tax savings to Mark is $72,500. Mark also has the ability to restrict his gift for a specific purpose, or to endow his gift, so it lives on forever.

2. Establish a charitable remainder trust and receive an income for life in exchange. This is a great option if you do not want to own the property anymore, but you want to retain some income for yourself.

The benefits of a charitable remainder trust are:

• No longer have to manage and maintain the property,
• Annual income for life or number of years,
• Avoidance of capital gains tax on appreciated property,
• Income tax deduction,
• Potential reduction of estate tax, and
• Significant gift to the Sisters of St. Mary of Oregon.

3. Give a future interest in your property, but retain the right to live there for the rest of your life. If you are 75 years of age or older, consider this gift planning opportunity. By establishing a life estate agreement with the SSMO Foundation, you maintain the right to live in, maintain and otherwise use the property as you see fit while you are alive.

The future interest in your home is transferred to the Foundation so that at your death, the property is owned by the Foundation. As a result, you are able to take an income tax deduction for a portion of the value of your home while you are alive. You can benefit now from your ultimate gift.