Cash Life Income Gift
Cash donations is the easiest of all assets to transfer in order to fund a life income gift. A Charitable gift vehicle is likely to pay a higher rate of return than certificates of deposit or savings accounts, thus increasing the donor's income. An additional advantage of making a cash gift is that it is deductible up to 50 percent of the donor's Adjusted Gross Income.
Often donors find in reviewing their assets that real estate, whether primary residence, vacation home or acreage, has appreciated the most of all assets held and forms a significant portion of total assets. A gift of real estate to Health Emergent International Services can offer special benefits to both donor and recipient and can be accomplished in different ways.
Outright Gift of Real Estate
An outright gift is appropriate when the real estate has grown in value and the owner no longer wishes to own or manage the property. A gift to the University results in a charitable tax deduction to the donor based on the fair market value of the property and no capital gains tax liability. If the property produced no income, the gift does not affect current income. Indeed, the donor saves annual expenses associated with the property.
Gift of Real Estate to Provide Income
Using real estate to fund a charitable gift to the University can result in income to the donor. A gift can be structured to provide fixed income, variable income, or income that is linked to the earnings of the asset used to fund the gift.
Whatever gift vehicle is chosen, the donor incurs no capital gains tax liability on the appreciated portion of the fair market value of the property, and enjoys a charitable tax deduction in the year the gift is made.
A gift of real estate is a potential benefit to both donor and HEIS. To ensure that the gift transfer takes place smoothly, special attention should be paid to the following elements in the transfer of the property:
Property should be readily salable so that HEIS does not incur undue carrying expenses;
A qualified appraisal must be performed to substantiate the gift amount;
Ideally, the real estate should be mortgage-free for the donor to receive the maximum tax benefits of the gift.
Gift of Real Estate and Retained Life Estate
A donor and spouse may decide to make a gift of their principal residence or vacation home to the University and retain the right to live in the house for their joint lifetimes. The donor receives a charitable tax deduction in the year of the gift and retains rights and duties of ownership for life.
Health Emergent International Services
Office of Gift and Estate Planning
20606 SE 34th Street
Sammamish, WA 98075