When does it make sense to donate your real estate to 2nd Chance Housing Inc?
Enjoy significant financial benefits while providing a charitable benefit to the community
While the donation of appreciated securities—stocks, bonds and mutual funds—is common, relatively few individuals donate real estate to charity.
In many cases, if you take into consideration the ongoing property taxes, income taxes, repair and maintenance costs, management costs or if the property is sold, the cost of legal fees, brokerage fees, estate taxes, inheritance taxes and capital gains taxes it is often financially preferable to donate properties to 2nd Chance Housing Inc. (2CHI). It also saves heirs the trouble of trying to divvy up the gains if the will is contentious or inequitable.
Under specific circumstances, however, the donation of your real estate can be mutually advantageous to both you the real estate owner and 2CHI the charity.
Some of those circumstances are: (1) when your property significant long-term appreciation, such that you would incur a sizable capital gains tax upon selling it; (2) when you want to help improve the health of the “individuals and communities we serve; (3) when the benefits of an IRS tax deduction; (4) when you want to make a positive difference for others less fortunate; (5) when you hold uninsured catastrophes that are more a detriment financially to continue to maintain; (6) when your property is idle, lacking positive cash flow and represent an asset that lacks useable potential. (7) when your fully depreciated property is not serving your financial interest; and, (8) when your property is relatively easy for 2CHI to incorporate into their inventory of properties dedicated to assisting underserved families, with minimal chance for incurring liability or major carrying costs prior to the rental or sale. These conditions are most frequently met by individuals seeking to donate a long-held primary or secondary home. The donation of commercial or industrial real estate is also possible, but brings many other potential concerns, including possible tenant or lease issues and other legal complications.
A typical scenario might look something like this: A couple who bought their house 15 years ago for $100,000 has seen it appreciate to a current valuation of $175,000. Their mortgage is fully paid off, and their children have grown and started their own families. Actively philanthropic, the couple consider selling their home and donating the profit to 2CHI.
When they approach their financial advisor with the idea, however, he informs them the direct donation of the home to 2CHI would allow them to take a full, fair-market-value tax deduction while eliminating the substantial capital gains tax they would incur if they sold the property first and then donated the proceeds. This two-pronged tax benefit is possible with the donation of personal non-cash assets, be it public or private stock, bonds or real estate, and makes the donation of such assets to 2CHI very attractive for donors. If the same property were instead transferred to a private foundation, in most instances the charitable tax deduction would be limited to the donors’ basis in the property.
The end result of donating real estate directly to 2CHI is that you are able to give more than you would have through more conventional methods of giving—a true win-win for you and us alike. Privately owned real estate (residential, business and farm) comprises approximately $35.87 trillion of wealth in the United States. If this method of giving were employed more frequently, it could do immeasurable good as a significant source of charitable funds.
For more details on how to donate call 262 344 7075 or email firstname.lastname@example.org