Using Real Estate in Planning Your Gift
A gift of real estate can often be an attractive way to make a substantial commitment to the American Association for Cancer Research (AACR) and simultaneously realize important tax and income benefits. You can give either all or a percentage of the gifted property. You may be able to significantly reduce the amount of income, capital gain, and estate taxes you otherwise might have to pay. You also may be able to earn an income from your gift, if you choose.
There are many types of real estate suitable for a gift to the AACR: personal residence, vacation property, commercial property, building lot, undeveloped land, farm or ranch, etc.
The best circumstances for considering a gift of real estate to the AACR are: (A) when the property in question has significant long-term appreciation, when you [the owner] would incur a sizable capital gains tax when selling it, and; (B) when the property is relatively easy for the AACR to sell, without incurring liability or major costs prior to the sale. Donors seeking to donate a long-held primary or secondary home typically meet these conditions.
For example, John and Judy Donor, who bought their home 20 years ago for $250,000 have seen it appreciate to a current value of $1 million. Their mortgage is paid off and their children have grown. The couple considers selling their home and donating the profit to an important charity where they are confident that such support will make a transformational difference to humankind.
The Donors learn that the direct donation of their home to the AACR would allow them to take a full, fair-market-value tax deduction, while also eliminating the substantial capital gains tax they would otherwise incur if they sold the property first and then donated the proceeds to the AACR. This multiple tax benefit is possible with the donation of personal “non-cash” assets and makes the donation of real estate to the AACR very attractive for donors.