Real Estate Gifts During Lifetime

If you donate real estate during your lifetime, it may ease your other financial burdens through tax benefits.

Example (primary residence):

A 75-year-old donor creates a retained life estate with a primary home valued at $500,000 in October 2009. She receives a tax deduction of $333,333 and can remain in her home as long as she chooses. The 2009 deduction is 26% higher than it was just two years ago, because interest rates are so low.

Example (investment property):

Adam owns a tract of undeveloped land for over 25 years originally purchased for $25,000 (the “tax basis”) and has been maintaining and paying taxes on it ever since. The present value of the property is $1,000,000.

  • If Adam sells the property, the profit (i.e. $975,000) is subject to Federal and State Income Tax.
  • For example, a NJ resident that would be potentially liable to taxes in excess of $300,000 of taxes (depending on tax bracket).

Benefits:

  • You receive an income tax deduction for the fair market value of the real estate, no matter what you originally paid for it.
  • You pay no capital gains tax on the transfer.
Multi-Year Pledges

Donors who want to make a larger gift can spread payments out over three to five years. Making a multi-year pledge enables you to have a greater impact to IRUSA and, by providing a reliable source of funding, helps the IRUSA Waqf budget over several years.

Donor-Advised Funds

Donor-Advised Funds (or DAFs) allow you to make a charitable contribution, receive an immediate tax benefit and then recommend grants from the fund over time. You can then choose IRUSA to receive grants from the funds.

How a Donor-Advised Fund Works
  1. You make an irrevocable contribution of personal assets.
  2. You immediately receive the maximum tax deduction that the IRS allows.
  3. You name your donor-advised fund account, advisors, and any successors or charitable beneficiaries.
  4. Your contribution is placed into a donor-advised fund account where it can be invested and grow tax free.
  5. At any time afterward, you can recommend grants from your account to qualified charities.