A gift of real estate is a generous way of supporting the University of Maryland without touching your bank account. When you give the university appreciated property that you have held longer than one year, you get a federal income tax charitable deduction, and you avoid paying capital gains tax. Additionally, you no longer have to deal with that property’s maintenance costs, property taxes, or insurance.
Another benefit is that you do not have to sell the real estate. You can deed the property directly to Maryland or ask your attorney to add a few sentences in your will or trust agreement.
Ways to Give Real Estate
You can give real estate to Maryland in the following ways:
When you make a gift today of real estate you have owned longer than one year, you qualify for a federal income tax charitable deduction equal to the property's full fair market value. This deduction lets you reduce the cost of making the gift and frees cash that otherwise would have been used to pay taxes. By donating the property to the University of Maryland, you also eliminate capital gains tax on its appreciation.
A gift of real estate through your will or living trust allows you the flexibility to change your mind and the potential to support our work with a larger gift than you could during your lifetime. In as little as one sentence, you can ensure that your support for Maryland continues after your lifetime.
Perhaps you like the tax advantages a gift of real estate to our organization would offer, but you want to continue living in your personal residence for your lifetime. You can transfer your personal residence or farm to Maryland but keep the right to occupy (or rent out) the home for the rest of your life. You continue to pay real estate taxes, maintenance fees and insurance on the property. Even though Maryland would not actually take possession of the residence until after your lifetime, since your gift cannot be revoked, you qualify for a federal income tax charitable deduction for a portion of your home's value.
Are you tired of the hassles of maintaining your property such as paying taxes, utilities and repair bills? Consider donating the property to Maryland in exchange for reliable payments for life for you (and someone else, if you choose). When you arrange a charitable gift annuity, you receive a federal income tax charitable deduction in the year you set up the gift annuity when you itemize on your taxes. If you use appreciated real estate to make a gift, you can usually eliminate capital gains tax on a portion of the gift and spread the rest of the gain over your life expectancy. A gift of unmortgaged property to fund a deferred gift annuity is preferable and generates the greatest tax benefit.
*If you want to inquire about funding a deferred gift annuity through real estate, please call the Office of Gift Planning at 866.646.4UMD.
When you make a bargain sale, you sell your property to our organization for less than what it is worth. The difference between the actual value and the sale price is considered a gift to Maryland. A bargain sale can be an effective way to dispose of property that has increased in value, and it is the only gift that can give you a lump sum of cash and a charitable deduction (when you itemize) at the same time.
You can contribute any type of appreciated real estate you have owned for more than one year, provided it is unmortgaged, in exchange for an income stream for life or a term of up to 20 years. The donated property may be a residence (a personal residence must be vacant upon contribution), undeveloped land, a farm or commercial property. Real estate works well with only certain variations of charitable remainder trusts. Your estate planning attorney, who will draft your trust, can give you more details.
This gift can be a wonderful way for you to benefit Maryland and simultaneously transfer appreciated real estate to your family tax-free. You should consider funding the charitable lead trust with real estate that is income-producing and expected to increase in value over the term of the trust.
A gift of real estate may be a perfect way to honor your loved one in perpetuity. When you make an endowed gift of real estate, your contribution is invested with and becomes part of our endowment. An annual distribution is made for the purpose you designate. Because the principal remains intact, the fund will generate support in perpetuity.
When you transfer real estate to your donor advised fund, you avoid capital gains taxes and qualify for a federal income tax deduction based on the fair market value of the property when you itemize your taxes.
An Example of How It Works
Janet purchased a rental property years ago and has watched it grow steadily in value. Still active in her career and traveling frequently, she is beginning to find management of the property more and more of a hassle. Janet sees this as an opportunity to give her rental property to a charity that is important to her while realizing valuable tax benefits.
Janet avoids capital gains tax on the appreciation and qualifies for a federal income tax charitable deduction for the property’s fair market value. Janet loves knowing that the gift of her property will make a big difference supporting our mission.
