There are tax benefits that apply to outright gifts of real estate you have owned for more than one year. These benefits include an income tax charitable deduction equal to the fair market value of the property on the date of the gift and elimination of all or part of the capital gains tax on the property’s appreciation.
Outright Gifts of Real Estate
Many years ago, Rhonda and Matt purchased a vacation home in the Adirondacks for $50,000. The current value of the property is $250,000. If they make an outright gift of the property Saratoga Bridges, they would receive an income tax charitable deduction of $250,000, the same as if they had made a cash gift of $250,000. However, by gifting the property instead of cash, they would eliminate capital gains tax on the $200,000 of appreciation in the value of the property. The value of eliminating capital gains tax can be substantial. Rhonda and Matt could save federal and state taxes in excess of 25% of the contributed property’s appreciation by gifting the property instead of an equivalent amount of cash (tax savings of more than $50,000 in this example, in addition to the tax savings from the $250,000 income tax charitable deduction).
Any gift of real estate to Saratoga Bridges can only be accepted with the approval of the Board of Directors. To receive a copy of Saratoga Bridges’ Gift Acceptance Policy, please call 518-587-0723.