Otey House Community Development Corporation
Gifts of Real Estate
A gift of real estate can be an attractive way to make a substantial commitment to Otey House Community Development Corporations and to realize important tax and income benefits at the same time. You may be able to reduce significantly the amount of income, capital gain, and estate taxes you otherwise would have to pay. You also may be able to earn an income from your gift. Finally, the disposal of your property can relieve you of management worries.
There are many types of real estate that may be suitable for a gift to Otey House C.D.C., including gifts of a personal residence, vacation home, farm or ranch, commercial property, building lot, agricultural land, and undeveloped or unimproved land.
You may deed the property outright to Otey House C.D.C. then would sell the property, unless there was a special reason for holding it. You would benefit from an income tax charitable deduction for the appraised full fair market value of the donated real estate. (Any unused deduction can be used in up to five succeeding years.)
You may deed to Otey House C.D.C. an "undivided fractional interest" in your property, if you are not prepared to dispose of the entire property. The appraised value of the fractional interest is deductible for income tax purposes. Such a gift can be especially useful in providing a deduction to offset a capital gain generated by the subsequent sale of the entire property. Upon the sale, you and Otey House C.D.C. share proportionately in the proceeds. You may also deed your home, vacation home, or farm to Otey House C.D.C., and retain the right to use the property for your lifetime (and your spouse's). You will receive an immediate income tax charitable deduction for the interest deeded to Otey House C.D.C. in the year you make the gift.
For those seeking investment income from non-productive real estate, you can transfer your property to a Otey House C.D.C. charitable remainder trust that is designed to pay you and/or another beneficiary an income stream for life. Otey House C.D.C. would sell the property and reinvest the proceeds in accordance with your objective. You receive an immediate income tax charitable deduction for a portion of the appraised value of the property. In addition, Otey House C.D.C. can sell your property with no capital gain tax liability. Moreover, you receive investment diversification and professional management through your Otey House C.D.C. at no cost to you.
You may place income-producing real estate into a charitable lead trust to benefit Otey House C.D.C. , and ultimately your heirs. During the trust term, an income stream would flow to Otey House C.D.C. . At the termination of the trust, the property would pass to your heirs. Such an arrangement can be effectively utilized to transfer property to your heirs at a reduced gift and estate tax cost, particularly if you expect the property value to increase substantially over time. (Typically, this arrangement is appropriate for high net worth individuals with investment real estate worth $500,000 or more.)
Gifts of real estate require both a recent written appraisal and IRS Form 8283 to substantiate your charitable income tax deduction. For your protection, you should not enter into any type of binding agreement to sell the real estate before deeding the property to Otey House C.D.C. . Mortgaged property requires special planning. In many cases, a gift of a fractional interest in the property can avoid any adverse consequences.
Because of liability and environmental concerns, Otey House C.D.C. should be notified in advance of proposed real estate donations to ensure that they would fall within our gift acceptance guidelines. Please call us 305-681-5601 in the state of Florida to talk further with one of our development representatives.
At Otey House C.D.C. , we recommend that you consult with your attorney or tax advisor for the various tax benefits and restrictions that may apply to your specific situation. Otey House C.D.C. does not provide legal or tax advice, but our staff are always available to you and your advisors to answer questions or to help arrange a planned gift to Otey House C.D.C.