MANY OF OUR ALUMNI, through their hard work and skill, have managed to acquire not only a home that’s their primary residence but also a vacation home, farmland, or rental property. They’ve also shared with me that, over time, their real estate has appreciated significantly in value.
Of course, this can create a tax problem if they sell the property during their lifetime, not to mention the hassle associated with prepping the property for sale. Rental property owners tell me they are tired of the hassle that comes with maintaining the property and dealing with renter contract issues. Some real estate owners also share that they do not have heirs who want ownership of the property when they ultimately pass away.
While there are fond memories tied to real estate, many property owners are unaware of the benefits and ease of making a gift of real estate to a public charity. Sometimes, they are surprised to learn that Indiana University School of Medicine has the resources and expertise to accept gifts of real estate. IU will sell it and use the proceeds to fulfill our mission of preparing healers and transforming health.
Benefits to You
Depending upon which charitable giving strategy a donor uses, there are a variety of benefits associated with giving real estate to a charity like the School of Medicine. These include:
- Qualifying for a charitable income tax deduction.
- Avoiding or minimizing exposure to the capital gains tax.
- Generating a stream of income for yourself.
- Receiving a lump sum of cash.
- Continuing to live in your residence even after making an irrevocable gift.
- Minimizing exposure to the federal estate tax.
- Avoiding probate, which is a frequent concern for single or widowed property owners.
Real Estate Criteria
It can make sense to donate real estate that meets the following criteria:
- The property has been held for more than a year and has appreciated significantly.
- The property is marketable and relatively easy to liquidate.
- The property is debt-free.
- The donated real estate is a primary residence, vacation home, farmland, or rental property.
Note: Indiana University does not accept gifts of vacation time shares.
Ways to Give Real Estate
Fortunately, there are multiple options available when donating real estate. Gifts can be made during the owner’s lifetime or through their estate plan. An owner can give real estate to the School of Medicine in various ways:
- Outright gift during your lifetime — Receive an income tax deduction equal to your property’s value.
- Retained Life Estate — Keep living in your home and receive a substantial tax deduction.
- Charitable Gift Annuity or Charitable Remainder Trust — Give your property and receive lifetime income.
- Bargain Sale — Receive cash for a portion of your property’s value and a tax deduction for the difference.
- Charitable Lead Trust — Give your property so IU School of Medicine receives periodic distributions.
- Bequest via your will or trust — Forgo the cost and burden of selling property through your estate.
- Execute a TOD (Transfer on Death deed) — Ensure your property goes to the School of Medicine while avoiding the costly, timely, and often stressful probate process.
No matter your giving strategy, letting go of the hassle is often the biggest motivation for making the gift. Plus, making a charitable gift enables a real estate owner to make a lasting impact at the School of Medicine.
Learn More
If you have any questions about a charitable gift of real estate, please contact Tim W. Ueber, senior director of planned giving at IU School of Medicine, at twueber@iu.edu, or (317) 274-0187.
