Legacy Planning Using Real Estate – Part 3

Mary, age 82, and her husband, Charles, bought their home more than 40 years ago. Charles passed away five years ago, and under the terms of a buyout agreement, Mary will receive $500,000 of capital gains income this year.

Her certified public accountant informs Mary that the capital gains tax will be in excess of $90,000. They discuss gifting her home to her church, through a charitable bequest. However, a bequest will not provide a current income tax benefit.

Then the accountant tells Mary that she can transfer her home to her church and retain the use of the home for her lifetime. In addition, she will receive substantial current income tax savings. Mary, of course, will be responsible for maintenance, taxes, and insurance on her home.

The appraised value of Mary’s home is $400,000. She will receive a charitable income tax deduction of $296,450 for the present value of the remainder interest in the property gifted to her church.

Mary is very pleased with this choice. She wants to make this special gift to her church, and she also receives an income tax benefit that will offset the capital gains tax on the buyout of her family’s business. See Summary of Benefits, at right.

Contact David Battles, CPA, at 800-259-6863 or dbattles@okumf.org to learn more about how you could benefit from a gift of real estate.

Please note: The names and images are representative of a typical donor.

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