When appreciated real estate is given to us, capital gains taxes can be completely avoided and the full fair market value of the property is generally deductible for itemizers as a charitable contribution.
Gift of a Remainder Interest in a Personal Residence or Farm
A special provision of the tax law allows an immediate income tax charitable deduction for a gift of a remainder interest in your home or farm. With a remainder interest gift, you retain an absolute right to occupy the home or farm for your life (or the life of a family member). The property passes to us only after termination of the life estate(s).
The charitable deduction allowable for this future gift is the present value of our right to receive the property at some later date. The age of the life tenant is the primary factor in determining the present value of our deferred interest and the charitable deduction. The gift is deductible in the year of the transfer (subject to certain income limitations, and assuming the donor itemizes).
Gift of a Fractional Interest in Real Estate
Federal tax laws let donors take a charitable deduction for gifts of fractional interests in real estate. This type of gift can be especially rewarding when you own a vacation home that you use only part of the year.
Example: Mary and Jim own a $300,000 vacation home that they use for only two months of the year. They can give our institution a 50% interest in the property, qualify for a tax deduction for the value of our interest in the property, and still have a right to use and occupy the property for up to half the year.