An Example of How it Works
Janet purchased a rental property years ago and has watched it grow steadily in value. Still active in her career and traveling frequently, she’s beginning to find management of the property more and more of a hassle. At this stage of her life, Janet has decided to move to a 55+ residential community, where all exterior maintenance is provided and she doesn’t have to worry about security issues. Janet sees this as an opportunity to give her rental property to Texas Parks and Wildlife Foundation while realizing valuable tax benefits.
Janet avoids capital gains tax on the appreciation and qualifies for a federal income tax charitable deduction of $250,000, which is the property’s fair market value today. She is able to claim 30% of her $200,000 adjusted gross income, or $60,000, in the year of the gift. In the five years following, she can continue to use up the remaining $190,000 deduction. Janet is happy in her new condo and loves knowing that the gift of her property will make a big difference supporting our mission.
Ways to Give Real Estate
An outright gift
When you make a gift today of real estate you have owned longer than one year, you qualify for a federal income tax charitable deduction equal to the property’s full fair market value. This deduction lets you reduce the cost of making the gift and frees cash that otherwise would have been used to pay taxes. By donating the property to us, you also eliminate capital gains tax on its appreciation.
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A gift in your will and trust
A gift of real estate through your will or living trust allows you the flexibility to change your mind and the potential to support our work with a larger gift than you could during your lifetime. In as little as one sentence or two, you can ensure that your support for TPWF continues after your lifetime.
A retained life estate
Perhaps you like the tax advantages a gift of real estate to our organization would offer, but you want to continue living in your personal residence for your lifetime. You can transfer your personal residence or farm to TPWF but keep the right to occupy (or rent out) the home for the rest of your life. You continue to pay real estate taxes, maintenance fees and insurance on the property. Even though we would not actually take possession of the residence until after your lifetime, since your gift cannot be revoked, you qualify for a federal income tax charitable deduction for a portion of your home’s value.
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A bargain sale
Want to sell us your property for less than the fair market value? A “bargain sale” may be the answer. When you make a bargain sale, you sell your property to our organization for less than what it’s worth. The difference between the actual value and the sale price is considered a gift to us. A bargain sale can be an effective way to dispose of property that has increased in value, and it is the only gift vehicle that can give you a lump sum of cash and a charitable deduction (when you itemize) at the same time.
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A charitable remainder trust
You can contribute any type of appreciated real estate you’ve owned for more than one year, provided it’s unmortgaged, in exchange for an income stream for life or a term of up to 20 years. The donated property may be a residence (a personal residence must be vacant upon contribution), undeveloped land, a farm or commercial property. Real estate works well with only certain variations of charitable remainder trusts. Your estate planning attorney, who will draft your trust, can give you more details.
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A charitable lead trust
This gift can be a wonderful way for you to benefit TPWF and simultaneously transfer appreciated real estate to your family tax-free. You should consider funding the charitable lead trust with real estate that is income-producing and expected to increase in value over the term of the trust.
A donor-advised fund
When you transfer real estate to your donor-advised fund, you avoid capital gains taxes and qualify for a federal income tax deduction based on the fair market value of the property when you itemize your taxes.
