Since the Diocese of Ogdensburg, your Parish, Catholic School or other Diocesan organizations or programs are qualified charitable organizations, they can sell real estate gifts without incurring tax on the appreciation. There are a number of ways to make a real estate gift. Some examples include:
Give the Entire Property – Example- In 1990, Mr. and Mrs. Smith purchased a piece of land of $10,000. It was recently appraised at $50,000. If they sell it, they will have to pay tax on the appreciation. However, if they give the deed to the Diocese or the beneficiary of their choice, they will be free of tax and also escape the hassles of having to sell the property. They will also receive a charitable income tax deduction for the appraised value of the property.
Give a Portion of the Property - Many people cannot afford to give an entire parcel of real estate, but they can give part of it. A good solution is to give an undivided interest in the property, say 50%. The Diocese then works with you to market and sell the property. A bonus for the donor is that they can use the income tax charitable deduction for the gift portion to help offset any taxes due on the other portion.
Give your Property and Continue to Live There- Some donors want to make a major gift to the Diocese, their Parish, a Catholic school, Ministries and Programs of the Diocese or Missionary Projects of the Diocese by giving their homes. However, they still need a place to live, so they arrange what is called a life estate gift. This simply means that they give their residence to the Diocese, obtain a charitable income tax deduction and retain the right to live there as long as they want. This arrangement removes the property from their estate and relieves them of their personal representative from having to dispose of the house later.
If you sell real estate you have owned for a number of years, it is likely you will be faced with a sizable capital gains tax, especially if the property is not your residence. Through an outright gift such as property, a double tax saving is possible. First, in most cases you will receive a charitable income tax deduction for the full value of the property. In addition, since the property was given rather than sold, you will not be liable for capital gains taxes on the transfer.
When deciding to make a charitable gift in the form of real estate, it is very important to choose property that meets a number of criteria - The property should be readily saleable; the property’s appraised value must equal the amount of the anticipated gift if property is mortgaged, tax and other benefits may still be obtained, but special attention should be paid to the manner in which the property is given.
As you can see, your gift of real estate can be of great benefit to both you and the Diocese, your parish, Catholic school, or other diocesan organization you choose. We will be pleased to discuss your gift plans with you upon request. As always, seek advice from your financial advisors as you plan gifts of this type.