GIFTS OF REAL ESTATE

Gifts of real estate can also be tax-wise. A residence, vacation home, farm, acreage, or vacant lot may have so appreciated in value through the years that its sale would mean a sizeable capital-gains tax. By making a gift of this property as an alternative, donors would avoid the capital-gains tax, and, simultaneously, receive a charitable deduction for the full fair-market value of the asset.

Donors can also make a gift of their home, farm, or vacation home so that a couple can continue to use it for its lifetime, all the while receiving current income-tax deductions. Example:

Mr. and Mrs. Brown own a vacation home by the lake that they would like to continue using. Its fair-market value is $150,000. By donating the home to the Y now, but retaining the right to use it for the remainder of their lifetimes, the Browns are able to achieve a current income-tax charitable-contribution deduction of approximately $62,500. (The exact amount will depend upon the Browns’ ages, the useful life of the house, and other factors.)