Willamette University generally accepts gifts of residences,
vacation homes, commercial buildings, farmland, timberland,
and undeveloped property. In addition, two special gift opportunities
are available in the following circumstances:
Bargain Sales. In some cases, you may wish to arrange
a bargain sale of property. In a bargain sale, Willamette would
pay you cash (less than the market value) for the property. You
would be subject to capital gains tax only on a portion of the
property's appreciation, and your income tax deduction would equal
the difference between the price paid by Willamette and the value
of the property. Often you can set the amount of Willamette's
cash payment to avoid tax on the transaction.
Life Estates in Residences and Farms. A unique
gift opportunity is available for personal residences, vacation
homes, and farms. You can give the property to Willamette while
retaining the exclusive right to use the property during your
lifetime. You would receive a current income tax charitable deduction
based on the present value of the University's future interest
in the property.
Benefits of Real Estate Gifts
Double Tax Benefits. The double tax benefits applicable
generally to gifts of appreciated property also apply to outright
gifts of real estate you have owned for more than one year:
- An income tax charitable deduction equal to the fair market
value of the property on the date of the gift
- Elimination of all or part of the capital gains tax on
the property's appreciation
The following example illustrates the advantages
of an outright gift of appreciated real estate instead of a cash
gift. More than a year ago, Pat Bearcat purchased a parcel of
real estate for $50,000. The current value of the property is
$250,000. If Pat makes an outright gift of the property to Willamette
University, Pat would receive an income tax charitable deduction
of $250,000, the same as if Pat had made a cash gift of $250,000.
However, by gifting the property instead of cash, Pat would eliminate
capital gains tax on the $200,000 of appreciation in the value
of the property. The value of eliminating capital gains tax can
be substantial. Pat could save federal and state taxes in excess
of 25% of the contributed property's appreciation by gifting the
property instead of an equivalent amount of cash (tax savings
of more than $50,000 in this example, in addition to the tax savings
from the $250,000 income tax charitable deduction).
Note that if you own property that has decreased
in value, you generally obtain more favorable tax results by selling
the property and contributing the cash proceeds to the University,
rather than contributing the property to the University.
If you make a bargain sale of appreciated property
to Willamette, you are treated as selling a portion of the property
to Willamette, and making a gift of the remaining portion of the
property. The double tax benefits apply to the portion of the
property gifted to the University. In the case of a gift of a
remainder interest in a residence or farm, where you retain a
life interest, you also receive double tax benefits. However,
your income tax charitable deduction equals the value of the University's
remainder interest in the property, not the full fair market value
of the property.
Increased Income and Diversification. Gifts of real
estate can be used to fund life-income arrangements with Willamette,
enabling many donors to diversify their investments and increase
their income. For example, you can transfer low-yielding real
estate to a charitable remainder trust, where the University,
as trustee, can sell the property tax-free and invest the proceeds
in a diversified portfolio of stocks and bonds. [learn
more about charitable remainder trusts and other life-income arrangements]
Please contact the Office
of Gift Planning at (503) 370-6022 to discuss the nature
of the real estate you are considering giving to the University. |
