Giving Real Estate

Quite often the wealth with which God has blessed us comes in the form of real estate. In fact, studies show that anywhere from 35 to 60 percent of people's net worth is held in real estate.

World In Need International partners with Orlando Christian Community Foundation (OCCF) to accept direct gifts of unencumbered real estate. Such gifts can provide you with a far greater tax deduction than if you sell the real estate yourself and then donate the proceeds to WIN. OCCF will handle the administrative burden by receiving, managing and selling the asset for you, and then placing the net proceeds into the Harvest Foundation. From the Harvest Foundation, your gift will be used according to your designation(s).

You can give Real Estate from our Home Page or if you have any questions or wish to start the process for your gift, please fill out the contact form, or call World In Need at 330-401-9404.  



A Real Estate Gift Example

Suppose Bob and Joyce invested in real estate 25 years ago by purchasing property for $5,000. Since then, the real estate has grown to have a fair market value of $250,000.

A buyer has approached them to buy the real estate. But instead of selling the real estate to the buyer, paying the taxes and giving away the net proceeds to WIN, Bob and Joyce decide to give the real estate directly to the Harvest Foundation. (They wisely make this gift before signing any letter of intent, binding contract or other formal agreement with the buyer.)

Assuming Bob and Joyce are in a 35 percent federal tax bracket and a 6 percent state tax bracket, here's the impact of their decision:
 

• No capital gains tax. Bob and Joyce avoid capital gains tax and save $51,450 (21 percent of $245,000) in federal and state income taxes.

• Charitable income tax deduction. Bob and Joyce get a charitable income tax deduction (subject to the 30 percent limit of adjusted gross income) of $250,000, the fair market value of the real estate. Their cash flow increases by $102,500 (41 percent of $250,000), the amount of their federal and state income tax savings, and they can carry over any unused portion of their $250,000 deduction for the next five years.

• Maximized gift. Bob and Joyce are able to give $250,000 to WIN instead of the $198,550 they would have had if they had sold the real estate and donated the net proceeds. They will avoid the tax bill of $51,450 and instead give this amount to WIN through the Harvest Foundation!

• Lower out-of-pocket costs. Bob and Joyce's out-of-pocket cost of the $250,000 gift is $147,500-far less than the $168,595 they would have paid if they had sold the real estate and then given away the net proceeds.

Another example:

George and Sue bought a piece of property 30 years ago for $50,000. This year, it was worth $500,000, and they wanted to sell the asset and then give the proceeds to World In Need International. Doing so, however, would have sent $94,500 to the federal government in capital gains taxes, and reduced their gift to $405,900.

When George and Sue learned about World In Need International, they decided to give their property before selling it. This increased their gift (and charitable deduction) to $500,000, which saved them $205,000 in income taxes (Assuming a 35% federal and 6% state tax bracket).

The extra $94,500 went to further the work of World In Need International, and their charitable deduction provided a tax refund of $38,745 (based on their income and other deductions) which George and Sue used to help put their son through college.


Here's how it works:

You can give Real Estate from our Home Page or if you have any questions or wish to start the process for your gift, please fill out the contact form, or call World In Need at 330-401-9404.  

This information is designed to provide information and illustration of the subject matters covered. It is not intended, nor should it be used as legal, accounting or other professional advice. It is always a good idea to seek legal and tax advice from your professional advisor(s).