Your Home Can Provide Versatile Gift Options

The currently prevailing historically low interest rates directly affect the discount rate the IRS uses to value so-called split-interest charitable gifts (e.g., charitable remainder trusts and gift annuities). Generally speaking, the lower the interest rate, the lower the value of the charitable deduction.

A major exception to this rule in which a lower IRS discount rate produces a higher charitable deduction is for a gift of a remainder interest in a personal residence or farm. Under this arrangement, the donor makes a gift of a residence or farm and retains the right to occupy the property for life or until such time the donor decides that he or she wishes to move for whatever reason.

Result

A substantial tax deduction and tax saving that frees up tax dollars into spendable income without causing any disruption in the donor’s lifestyle. In addition the donor will escape capital-gain tax consequences, if any.

Moreover, the term personal residence is broadly defined in the tax regulations to include any property used by the owner as a personal residence (e.g., a condominium, a vacation home, and even a boat).

Please let us know if such an arrangement would be of interest to you.

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