The rules about giving real estate are essentially the same as for gifts of securities. Almost any type of real estate may be donated: undeveloped land, farms, commercial buildings, vacation homes, or your residence.
Outright Gift
You receive a charitable deduction for the full fair-market value of the unencumbered real estate. You may apply the deduction up to 30 percent of your AGI—in the year of the gift—with the five-year carryover provision. You avoid capital-gain tax on the appreciation you have in the property and there are no gift taxes. Because you have removed the property from your estate, you have also reduced your estate taxes.
Bargain Sale
A donor who wants to recover a portion of the value of the property that he or she wishes to contribute to the UW Foundation may consider entering into a bargain sale transaction. In effect, a bargain sale is a sale of property to charity for less than its fair-market value. The bargain sale price must be any amount mutually acceptable to the charity and the donor.
Gift of Personal Residence or Farm with Retained Life Estate
You may give the property to the UW Foundation while retaining the right to occupy the residence or operate the farm. Such a gift of a remainder interest provides a charitable income-tax deduction for the present value of the remainder interest that frees up tax dollars into spendable income—without causing any disruption in your lifestyle. In addition, this plan permits you to escape any potential capital-gain tax on the built-in appreciation.
- You transfer title to personal residence or farm to the UW Foundation
- The UW Foundation allows you (and spouse) to remain in residence for life
- You (and spouse) occupy and maintain residence
- The UW Foundation uses or sells property after your death(s)
Benefits of this type of gift
- No out-of-pocket cost for substantial gift to UW Foundation.
- Federal income-tax deduction for remainder value of your residence or farm.
- You (and your spouse) can occupy residence for life.
