By: Laurie Valentine- COO & Trust Counsel
Do you own a vacation home or other real estate you no longer want to use or manage? And, have you have been thinking about making a legacy gift to your church or other charitable cause? If your answer to both questions is “yes” consider using that real estate to accomplish your legacy giving objectives.
An outright charitable gift of real estate that has appreciated in value can provide double benefits—-an immediate income tax deduction equal to the current market value of the property and avoidance of the capital gains tax you would owe if you sold the property.
If the property’s value has depreciated, a sale of it by you followed by a gift of all or a portion of the sale proceeds to charity may provide both a charitable contribution tax deduction and a capital loss deduction on your income tax return.
If you are not comfortable with giving up the full value of the real estate, a bargain sale to charity may be the answer. With a bargain sale you agree to sell the real estate to the charity for less than its current market value. The transaction is part charitable gift (the difference between the market value and the sale price) and part sale (the difference between the sale price and your cost basis in the property). You recognize capital gains on the sale portion of the transaction, but only for the difference between your cost basis in the property and the actual sale price. A charitable deduction is allowed for the value of the gift portion of the transaction.
For more information, please call us at (502) 489-3533 or toll free in KY at 1(866) 489-3533.
The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.