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Real Estate

Gifts of Real Estate benefit your favorite cause, with possible tax savings for you!

 

1. Before you sell real estate, give a percentage to UMRC-Porter Hills Foundation and increase your tax savings!

Here is an example: Fred wants to sell his $1,000,000 rental property that he paid $500,000 for ten years ago. He also wants to make a gift of $100,000 to UMRC-Porter Hills Foundation.

By giving 10% of the property to UMRC-Porter Hills Foundation BEFORE he sells the property, rather than with the proceeds, Fred:

  • Receives a $100,000 tax deduction now, even before the property sells; and
  • Avoids paying capital gains taxes on $50,000 (the capital gains from the 10% interest on $500,000)

2. Before you sell real estate, put the entire property into a charitable remainder trust and pay no capital gains tax!

Here is an example: The Joneses, both age 70, are tired of managing their rental property—the rents are low, and their headaches are high. They would like to sell their property, but do not relish paying a big capital gains tax bill. They paid $500,000 for the property, and it is now worth $2 million. The property is paid off and has no mortgage.

By putting the entire property into a 7% charitable remainder unitrust (CRUT)—whose terms state that UMRC-Porter Hills Foundation is the beneficiary of the CRUT after both the Joneses’ lifetime—BEFORE they sell their property, the couple:

  • Receives a large income tax deduction ($650,000, based on their ages and current interest rates);
  • Pay NO capital gains tax when they sell the property;
  • Receive $140,000 in income annually (7% of the property value), which is far greater income than their current rents;
  • May receive increased income in future years, because the 7% payment is based on the annual valuation of the CRUT; and
  • A nonprofit, like the UMRC-Porter Hills Foundation, will receive a transformative gift of the principal after the Joneses’ lifetime.

Contact Kelli Smith, CFRE, President & CEO of the UMRC-Porter Hills Foundation, at 734.433.1000 ext. 7502 or 616.577.2254 to receive a personalized illustration and learn about additional ways to make a meaningful impact on the lives of older adults.