|
|
Gifts of Appreciated Real Estate
It is not unusual for an individual to have purchased real estate with a
particular purpose in mind but find over time that circumstances and goals
have
changed. The owner may consider selling the property but be
dissuaded from action by the necessity to pay a large tax on the capital
gain. In consequence, the owner may just hold the asset, uncertain
of what to do. Such owners may wish to consider making a gift of the
property to the UNC Asheville Foundation, Inc., either through a charitable trust or as
an outright gift, thus gaining valuable tax benefits as well as the
personal satisfaction of having a positive impact on education in Western
North Carolina.
UNC Asheville Foundation, Inc., welcomes gifts of saleable real estate or real estate that
could be used by the university for its goals and purposes.
Tax Issues
- Long-term capital gain property (held more than one year) is deductible at its fair market value to up to 30 percent of the donor's adjusted gross income. The excess may be carried over for up to five succeeding years.
- There must be no binding agreement to
sell the property before the gift gift is complete or the donor is subject to capital
gains tax.
- The IRS requires that the donor obtain a qualified appraisal to substantiate a charitable deduction for a property gift of $5,000 or more. The appraisal must be performed and value rendered no earlier than 60 days prior to the date of the gift and no later than the due date of the donor's tax return in which the charitable deduction for the gift will be claimed.
- The donor must file an IRS Form 8283 with his or her income tax return.
- A subsequent sale of the property within two years of the date of the gift must be reported to the IRS by the UNCA Foundation on Form 8282. If the sale price is less than the deduction taken by the donor, the IRS can hold the donor liable for taxes on the difference.
Other Considerations
- Generally gifts of real estate are acceptable only after a Phase I Environmental Audit has determined that no reasonable possibility exists that the property is contaminated with toxic waste.
- The value of the donated real estate and its economic benefits and burdens to the Foundation shall be considered before acceptance of any gift. Factors to be considered include, but are not limited to, marketability, cost of taxes, insurances, special assessments and environmental concerns.
- Acceptance of debt-encumbered property by the Foundation is unlikely.
- Generally, the Foundation will not accept a gift involving real property that makes the Foundation a principal in a real estate partnership, joint venture, or business activity in which the Foundation participates fully in the risks of operation and has more than limited liability for the conduct of the business (e.g. as a general partner, principal in a joint venture, as an owner in a "working interest").
- Generally, the donor should place no terms or restrictions on the property with respect to its use or sale by the
UNC Asheville Foundation, Inc.
(Reasonable restrictions on the proceeds from the sale, such as benefiting a particular program or department or the establishment of an endowment fund, are acceptable.)
- The acknowledgement receipt will not establish the value of the property. It is the responsibility of the donor to set and defend the value he or she takes as a deduction for the gift. The receipt may, however, mention the appraised value of the property.
- Shortly after acceptance, the Foundation will seek to sell real property that it does not plan to use as part of its charitable activities. A timely sale will minimize contingent liabilities, maintenance and other costs.
|
|
