Gift of Real Estate

Ways to GiveMake a Gift of Real Estate

Do you have a piece of property that you’re not sure you want to keep?  Maybe it’s 50 acres of woodlands that you inherited long ago or a summer home that you no longer visit?  How would you like to avoid the hassle of selling that piece of property, never have to worry about getting a fair price, and gain valuable income and estate tax deductions?  Consider using real estate as a charitable gift to us.

How a gift of Real Estate Works:

You can donate your property outright, place it in a trust, or donate it through your will.  All of these methods will enable you to enjoy financial benefits while supporting the mission of BBBSCM/MW in a meaningful way. 

You:

  • Give property to BBBSCM/MW
  • Receive an income tax deduction

BBBSCM/MW:

  • Property is sold by BBBSCM/MW for a Major Gift donation

In addition to freeing you from the cost and responsibilities of ownership, making an outright gift of real estate that you’ve owned for more than a year offers these benefits:

  • You gain an income tax charitable deduction equal to the property’s full fair market value.  This deduction reduces the cost of making your gift and frees cash that otherwise would have been used to pay taxes.
  • You eliminate capital gains tax on the property’s appreciation.
  • The transfer isn’t subject to the gift tax, and the gift reduces your future taxable estate.
Gift of Real Estate vs. Cash

                                                                                  Give $300K Real Estate                       Give $300K Cash

Fair Market value of gift:                                              $300,000                                              $300,000

Ordinary income tax benefits

Charitable deduction                                                    $300,000                                              $300,000

Ordinary income tax savings                                         $105,000                                              $105,000

($300,000 x 35%)

Capital gains tax benefits

Cost basis on property                                                  $50,000                                              $300,000

Long-term capital gain                                                   $250,000                                                      $0

Capital gains tax savings                                               $37,500                                                        $0

($250,000 x 15%)

Total tax savings (line 3 + 6)                                          $142,500                                              $105,000

Net cost of gift (line 1 + 7)                                             $157,500                                              $195,000

Advantage of donating real estate over cash:             $37,500

1The amount of your tax deduction for charitable gifts is limited to 50% of your adjusted gross income, and may be limited to 30% to 20% of your adjusted gross income, depending on the type of property you give and the type of charity.  Any unused deductible amount may be carried over up to an additional 5 years.  Please consult with your tax professional to discuss your tax benefits.

2Assumes a 35% marginal income tax bracket and a 15% long-term capital gains tax bracket.

Is a gift of real estate the right thing for you? 

Ask yourself the following questions:

  • Do you want to make a significant gift that benefits BBBSCM/MW today?
  • Do the expenses and obligations of owning your property outweigh the income you receive from it?
  • Do you have any family members or loved ones who wish to take on the responsibilities or costs of owning your property after you’ve passed?
  • Do you want immediate income tax relief as well as elimination of capital gains tax on the property’s appreciation?

Contact Harold Pinkham, Director of Advancement, at 508-752-7868 ext: 12 with any questions you might have about making a gift of real estate to Big Brothers Big Sisters of Central Mass/ Metrowest.  We’re happy to help you without obligation.