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(Part of a series of articles on charitable giving and the Union County Foundation by David Vollrath - Exec. Dir.) This article continues our series on maximizing tax savings through charitable deductions. Today’s topic centers on gifts of land, which include raw ground, land with a house, a commercial property, or other structure. In each of these cases the charitable gift is ultimately accomplished by deeding the property to a charity. When deeding land (and the structures) there are several important considerations. The charitable deduction for an outright gift of land to charity is the market value. A certified independent appraiser can easily determine the market value. Such an appraiser will determine the value of comparable properties and then evaluate your property in comparison as of the date of your gift. The donor’s 1040 Federal Income Tax return requires this appraisal. Gifts of land valued at over $5000 require a special form (form 8283) that must be signed by the appraiser. Gifts of land offer two primary benefits to the donor. The first is the deduction of the fair market value that we already discussed. The amount of the deduction is limited to 30% of your adjusted growth income for the year of the deduction. You can capture the full deduction by carrying forward the unused portion over a period of up to six years. The second benefit of gifting land is that there is a bypass of capital gain. The bypass applies only if there is no prearranged agreement to sell the gifted property to a specific buyer. In certain cases the avoided capital gains taxes can amount to 20% or more. Often times the donated land may be encumbered by a debt or mortgage. Such a debt does not prohibit the donor from gifting the land to charity. In such a case the donor will receive a deduction only for the value of the property’s equity. Also the donor will have to report a partial capital gain on the transfer of the debt to the charity. As is always the case, you should consult a professional tax advisor in such a situation. Another consideration surrounding a gifted property may be environmental concerns. In select instances, it may be necessary to obtain an Environmental Impact Survey to verify that there are no environmental problems with the property. All things considered, gifts of land can work well for the donor and the receiving charity. The donor receives a substantial charitable deduction, bypasses capital gain on the property and the charity can either use the newly acquired property or sell it and benefit from the proceeds. The Union County Foundation encourages you to consider your present and future charitable goals. The Foundation is equipped to help you achieve these goals by providing: planned giving and estate planning resource information, charitable gift annuities/life income plans, and a broad array of charitable choices. Please call us at 937-642-9618, email commfounduc@imetweb.net, reference our website at www.emarysville.com/unioncountyfoundation, or stop by our Marysville office at 126 N. Main St. We are committed to helping you.... “preserve your footprint in time.” |
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