Tools For Giving Later
Retained Life Estate
What are they?
Your clients can turn their property's value into community good-while receiving financial and tax benefits-by making a charitable gift of real estate through The Community Foundation.
They can continue to live in and fully enjoy their home (or vacation property) as long as they like while still giving the future ownership of it to the Community Foundation. This is called a retained life estate. The gift of the "remainder interest" is a charitable contribution in the year the gift arrangement is made, which may result in a substantial income tax charitable deduction. When the life tenancy terminates, the Community Foundation becomes the owner of the property. The proceeds of the property's sale will go into a charitable fund your client established at the Community Foundation or be distributed to the charitable organizations they specify.
Highlights
- The personal residence may be a farm or vacation home as well as one's principal residence.
- The donor avoids capital gains tax on the appreciation provided there is no mortgage on the property.
- The donor may claim an income tax charitable deduction in the year of the gift, with carryover privileges for up to five additional years.
- The property is removed from the donor's estate, which will realize estate tax savings. The gift will also avoid probate and estate administration expenses.
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