Gifts of Real Estate: Getting Started
Imagine avoiding the hassle of selling a piece of property, with no worry about getting a fair price and at the same time realizing valuable income and estate tax deductions. This can be your reality when you consider using real estate to make a charitable gift to Colorado College. Here's what you need to know.
Donating a home or other piece of real estate eliminates the capital gains tax that would be owed if you were to sell it.
How It Works
You can donate your property outright, place it in a trust or give it through your will. All of these methods will enable you to enjoy personal financial benefits while supporting our work in a meaningful way. Following are details on the most straightforward way to make such a gift: direct donation of your property.
In addition to freeing you from the costs and responsibilities of ownership, making an outright gift of property that you've owned for more than a year offers these benefits:
- You obtain 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.
Compare the Benefits of Donating Real Estate vs. Cash
|Give $300,000 in Real Estate||Give $300,000 in Cash|
|1.||Fair market value of gift||$300,000||$300,000|
|Ordinary income tax benefits|
|3.||Ordinary income tax savings2
($300,000 x 35%)
|Capital gains tax benefits|
|4.||Cost basis in property||$50,000||$300,000|
|5.||Long-term capital gain||$250,000||0|
|6.||Capital gains tax savings2
($250,000 x 15%)
|7.||Total tax savings (line 3 + 6)||$142,500||$105,000|
|8.||Net cost of gift (line 1 - 7)||$157,500||$195,000|
|Advantage of donating real estate over cash||$37,500|
|Request a free guide to learn more about the tax benefits of a gift of real estate.|
Please contact Nancy Baxter, CIMA®, ’78 at 719-389-6231 or Nancy.Baxter@ColoradoCollege.edu if you have any questions about this way of leaving your mark on our organization.
1The amount of your tax deduction for charitable contributions is limited to 50 percent of your adjusted gross income, and may be limited to 30 or 20 percent of your adjusted gross income, depending on the type of property you give and the type of organization you give it to. Any unused amount may be carried over for up to an additional 5 years. Consult your tax professional to discuss your tax benefits.
2Assumes a 35 percent marginal income tax bracket and a 15 percent long-term capital gains tax bracket.
Gifts of Real Estate: Getting Started | Is This Gift Right for You? | Case Study | How to Complete Your Gift | Beyond an Outright Gift | Action Items
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The information on this website is not intended as legal or tax advice. For legal or tax advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes apply to federal taxes only. State income/estate taxes or state law may impact your results.