By using real estate to fund a gift, you may be able to make a gift to Chosen People Ministries of a size which would otherwise not have been possible. Whether it is a house, farm, vacation home, office building or plot of undeveloped land, your property can be a very helpful gift for you and for Chosen People Ministries.
A real estate gift can provide you with a combination of advantages and tax savings. Some of the benefits of a real estate gift accepted by Chosen People Ministries include:
- An immediate charitable income tax deduction in the year you make the gift.
- Avoiding capital gains taxes at the time of the transfer.
- The opportunity to live in your home or use the property for the rest of your life.
- Knowing that the property will be excluded from any estate and inheritance taxes.
Because each property and gift plan is unique, any real estate gift will require careful consideration by your legal and tax advisers. They can explain how advantageous a real estate gift can be.
There are several forms a gift of real estate can take:
An outright gift
The simplest of these is to make an outright gift. For an outright gift of real estate to occur, a deed is drawn up that transfers your property to Chosen People Ministries. Chosen People Ministries credits you with a gift equal to the fair market value of the real estate. You are eligible for a charitable income tax deduction for the property’s market value and you avoid any capital gains tax for which you might have been liable had you sold the property. You may donate an entire piece of real estate, or just a portion of it. You may also make the gift in stages. This last approach is often helpful from a tax planning perspective.
A part gift/part sale
The part gift/part sale type of real estate gift is also known as a “bargain sale” because it involves your selling property to Chosen People Ministries at a bargain price. You transfer property to Chosen People Ministries and, in exchange, Chosen People Ministries pays you an amount of money which is less than the property’s market value. The difference between the fair market value and what Chosen People Ministries pays you is considered a gift. You are eligible for a tax deduction and you avoid any capital gains tax on the portion of the transaction that is considered a gift.
A gift with a retained right to income
You can donate your property to Chosen People Ministries and, in exchange, Chosen People Ministries agrees to make annual income payments to you for the rest of your life and to a survivor beneficiary for his or her life. The amount of income you receive depends on the value of the property you donate and the ages of the income beneficiaries. For this type of gift you receive a tax deduction on a portion of the market value of the real estate and generally avoid the capital gains tax. Many people use life income gifts to convert a non-income producing asset, such as real estate, to one that produces an income stream.
A gift with a retained right to live in the donated property
You can transfer your home to Chosen People Ministries and specify in the deed that you are retaining the right to live in the house for the rest of your life or until you decide to leave it. You and Chosen People Ministries sign an agreement which spells out each party’s responsibility with regard to the property. The donor usually continues to be responsible for all expenses except major repairs. At the time you transfer the property to Chosen People Ministries, you receive a tax deduction for a portion of the market value of the property
A gift through your will
You can designate this gift as a specific bequest in your will. On your death, the real estate will be transferred to Chosen People Ministries, or in some instances the estate will sell the property and transfer the proceeds from the sale to Chosen People Ministries. Your estate will receive a charitable tax deduction for the value of the real estate at the time of your death. The language to accomplish this through your will is simple:
I/we give the property at ______________ (insert address or brief description of the property you wish to donate) to Chosen People Ministries, a not-for-profit corporation, incorporated in the state of New York.
How can I get more information?
Chosen People Ministries staff would be happy to answer any questions you have about a possible gift of real estate, with no obligation to you. Please e-mail us, call us at 212-223-2252, or write to us at Chosen People Ministries, 241 E. 51st Street, New York, NY 10022.