Donating marketable real estate such as a personal residence, vacation home, commercial property or even vacant land can be a creative way to make a significant gift to North Dakota Cowboy Hall of Fame (NDCHF) receiving important tax benefits and income. The benefits include charitable income tax deduction, avoiding capital gains tax at the time the gift is made and removing of the property from your estate, potentially reducing estate taxes and probate costs. A gift of your real property can also relieve you of the burden of managing or selling the property. Real property gifts can be made in several ways:
- Outright gift: Your benefits from an outright gift of real property would include an income tax deduction for the property's full fair market value, removal of the property from your estate and the reward of seeing your gift go to work for the NDCHF.
- Charitable remainder trust: If you still need the income generated by the property, a charitable remainder trust may be a good solution. The property is irrevocably transferred into a trust which pays income to you for life or a term of years. After that, the remaining principal goes to support the NDCHF. Additional benefits include a substantial income tax deduction in the year the trust is established and no capital gains tax at the time of the gift.
- Partial interest gift: If you are unable to donate the entire property, you may deed us an undivided partial interest. Alternatively, you may fund a charitable remainder trust with such a partial interest. Typically in both instances, the entire property is sold, with the proceeds being shared proportionally between you and NDCHF (or the trust). Your charitable deduction for the gift portion can help offset the capital gains tax on the property interest you keep.
- Retained life estate: Give the NDCHF your personal residence, but retain the right to live in it for your lifetime. A retained-life estate will give you an income tax deduction in the year you make the gift and the satisfaction of making an important gift during your lifetime.
- Bequest: You can make a testamentary gift of real estate through your will or trust.
For a personalized illustration of how a gift of real property would work for you, please contact us.