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You would consider entering
into a partnership with your favorite charity
in order to make a significant gift >
Your home is your principal asset, you want
to continue to live there, and you can continue
to maintain it > You’re seeking
an income tax deduction, not more income
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You can give your favorite charity your home, and still continue to live there for the rest of your life.
How? With a retained life estate.
This creative gift plan transfers your house to your favorite charity but reserves a free lifetime tenancy for you. You can make a significant gift with your most valuable asset, yet not disturb your living arrangements or your cash flow.
You will continue to be responsible for the
house’s taxes, structural maintenance and
upkeep. Also, you and the charity agree upfront
about what it will do if you no longer wish to
live in the house after you have donated it, or
if you become physically unable to continue living
there. Your gift will provide you with a charitable
income tax deduction, based on the fair market
value of your house minus the present value of
the life tenancy you have retained.
Here are some considerations if
you are contemplating a gift of your home to your
favorite charity.
- With
all gifts of real estate, the charity's financial
officers must review and approve the transfer.
- You will
need to secure an independent appraisal of your
home to establish its value for the deduction.
- If there
is a mortgage or lien on your home it will complicate
the transfer to charity and could result in
taxable income to you.
The charity can advise you on these matters.
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Example
You’ve always loved your home, and have no plans to move from it. It has appreciated significantly since you bought it, and today it is the largest asset in your estate. You are considering a gift to the local hospital in memory of your sister, but can’t locate an asset that you can part with comfortably.
You decide to donate your house, retaining a life estate for yourself and your spouse. You have secured an independent appraisal stating that your house is worth $250,000. The mortgage has been paid off.
Here are the benefits of your gift:
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Click here
to calculate the benefits a retained life
estate would
give you.
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Donors: Husband and Wife, 70 and 68
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Asset value
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$250,000
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Charitable deduction:
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$74,229
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Tax savings in 35% bracket:
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$25,980
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