Gifting of Real Estate
CAVEAT: None of this information in this section should be construed as legal, accounting, or tax advice and all donors need to seek out professional advice in these areas before donating real estate to Washington Masonic Charities.
To begin with, the three ways that Washington Masonic Charities can readily provide an opportunity to receive the benefits of planned giving through real estate are:
- Outright Gift
- Split Gift/Sale of Home
How each works, what the benefits are, and what restrictions we should consider having in place are as follows:
- Donor deeds their real estate to Washington Masonic Charities.
- Washington Masonic Charities sells the property and uses the proceeds to support its mission of Freemasonry in Washington.
- Donors are entitled to an income tax deduction for the full fair market value of the property (as determined by assessment prior to sale vs. the price Washington Masonic Charities actually receives).
- No capital gains tax will be owed on the property’s appreciation, so the full value of the donor’s property is available to support the Washington Masonic Charities.
- Property value must meet Washington Masonic Charities’ acceptance guidelines.
Split Gift/Sale of Home:
- Donor donates a fractional or percentage ownership of their residence to Washington Masonic Charities and retains the balance.
- Washington Masonic Charities, acting under a Co-Marketing Agreement with the donor, sells the property.
- Donor receives a pro rata share of the net sale proceeds when the property is sold.
- The portion donor donates to Washington Masonic Charities can be given outright or used to fund a life income gift if the procedures are in place to set up a life income gift.
- Washington Masonic Charities will use the proceeds of the donor’s gift to support the Charity’s mission. If the donor chooses to fund a life income gift, the proceeds become available to the Charity after donor’s lifetime.
- Washington Masonic Charities handles all transactional details of selling donor’s residence.
- Donors can use the cash from the sale portion to purchase another property.
- Donors may be able to apply any available capital gains exemption for the sale of a personal residence (presently $250,000 for individuals; $500,000 for couples) to offset capital gains taxes on the sale of the portion they retain.
- Donors are also entitled to an income tax deduction for the value of the portion they donate.
- Donors can elect to fund a life income gift with the donated portion of their property if Washington Masonic Charities has the procedures in place to set it up.
- Property must be donor’s primary residence, if the donor wishes to take the residential capital gains benefit.
- To realize the maximum tax advantage from this gift option, donor’s gain must significantly exceed $250,000 if they are a single person or $500,000 if they are married.
- Donor names Washington Masonic Charities as recipient of their property in their will or revocable trust.
- Washington Masonic Charities receives the property at donor’s death, sells it and applies the proceeds to support its mission.
- Donor assets remain available to them during their lifetime to cope with any needs that might unexpectedly arise.
- Real estate donated in a donor’s will or living trust will receive an estate tax deduction equal to the value of the property, meaning no estate tax will be owed on the property they leave to Washington Masonic Charities.
- Donor does not receive an income tax deduction for a bequest.
Note: Gifts of Real Estate are subject to Washington Masonic Charities Gift Acceptance policy. The donor may be responsible for appraisal costs and environmental review prior to the Board of Trustees accepting a gift of Real Estate. This is to protect both the organization and the donor in the event of fair market value or environmental mitigation issues.