Real Estate Interests

Real estate – from personal residence or farm to income-producing property or undeveloped land – can often make up a major part of one’s estate. To accommodate gifts using these valuable assets, the Jewish Community Foundation has formed the Real Estate Supporting Foundation. However, this type of gift must be structured carefully for the mutual benefit of the donor and the Foundation.

 

The information below describes a number ways to provide for the charities you care about through a gift of real estate.

An Outright Gift
If a donor can make an outright gift of real estate, then he or she is in a position to take maximum advantage of the tax laws by -
Avoiding the tax liability for any capital gain on the appreciation
Being eligible at the time the property was transferred to the Jewish Community Foundation for an income tax charitable deduction for the full fair market value of the property, as determined by qualified appraisal
Reducing the size of the donor’s taxable estate

A Retained Life Estate
With an outright gift or a gift in trust, donors would not be able to continue living in a residence or work the land. But they can make a gift of the future interest in a personal residence or farm and retain the right to remain on the property during their lifetimes. Donors can claim a tax deduction based on the value of the future interest of the property. They continue to pay the real estate taxes, insurance premiums and ongoing maintenance expenses for the property. But at the donors’ deaths, the full ownership of the property would pass to the Jewish Community Foundation, to be used as designated by the donors.

Charitable Trusts
Real estate can be used just as cash or appreciated securities to fund a charitable remainder trust. In this way, the donor would receive income from the trust for the rest of his or her lifetime. The trust principal would pass to charitable use only at the donor’s death. The donor would be eligible to claim an income tax charitable deduction at the time the trust was funded – based on the fair market value of the property as determined by a qualified appraisal, but reduced by an actuarial calculation based on the donor’s age.

By Bequest
Donors can make a specific bequest of real estate in a will or living trust. This would enable them to retain the full use of the property during their lifetimes.

 

Evaluation

Before accepting a gift of real property, the Foundation’s Gift Acceptance Committee must review the following:

A copy of the property deed
A copy of the property map or survey
A copy of the current tax assessment or similar indication of value and carrying costs
Qualified appraisal of the property
Phase I environmental inspection
Summary description of all insurance policies in force
Partnership Agreement, Tenant in Common Agreement or any other document affecting ownership

If the results of this review are positive, then the Committee will recommend acceptance of the gift into the Real Estate Supporting Foundation of the Jewish Community Foundation.