Gifts of Real Estate
Making a gift of real estate could be the right choice for you.
There are many ways to give, including options that generate income for you. Whether it’s your home, a rental property, a commercial building or agricultural land, you can use it to advance the University of North Dakota.
With a gift of real estate that you have owned for more than one year, the benefits may include:
- No capital gains tax on transfer
- Financial security for loved ones
- Increased lifetime income
- Continued use of the contributed property during your life
Ways to Give Real Estate
The simplest way to make a gift of real estate to the UND Foundation is to give the property outright. If the property has been owned for more than a year, you could receive an income tax charitable deduction for the full fair market value of the property. Note that your gift could be subject to IRS limitations based on your adjusted gross income.
Give and Retain Use
You can give your personal residence or vacation home to the UND Foundation now and retain the right to use the property. Customarily, you will be responsible for maintaining the property and paying all real estate taxes and insurance. In exchange for the gift, you will receive an income tax charitable deduction for the present value of the interest of your property. After your passing, the UND Foundation will own the property outright.
Give and Earn
If receiving income in exchange for your gift is your goal, you can set up a charitable remainder trust with the Foundation that will both benefit UND and pay income to beneficiaries you designate. You can determine the payout rate and how long the trust will exist (subject to IRS regulations). Since charitable trusts are tax-exempt, your property can be transferred into the trust and sold by the trustee without capital gains taxes owed at the time of the sale.
Real Estate Donation Checklist
Before the gift is made, the UND Alumni Association & Foundation will need:
- Original purchase information (date and price), and dates and amounts of capital improvements. This information constitutes your cost basis in the gift property and will be used to calculate the tax character of the beneficiary payments made from the trust.
- Information about how the property is owned: copy of the deed and copy of the title insurance policy. This will help us determine who legally owns the property (you, you and your spouse, a business entity, etc.).
- Information about the property and where it is located. This will help us to conduct our “due diligence process” and identify issues that might be relevant to the gift plan. If your real estate is rental property, it will also help us to estimate cash flows.
- Information about the condition of the property. This will help us determine whether there are any deferred maintenance issues and the potential costs of preparing to sell the property.
- Information about property value. If the gift goes forward , you will need to secure a qualified appraisal in order to substantiate your charitable deduction. However, before then, we will want to get a sense of the property’s value.
- Information about debt on the property. Debt on the property can cause tax complications for certain gift structures. This information will help us get a sense of the options available to you.
- Information about restrictions on the property. This will help us assess the marketability of the property.
- Latest tax bill with assessor’s valuation. This will provide us a preliminary indication of the property’s value.
Fees & Costs
The donor pays the appraiser’s fee for the qualified appraisal to support the income tax deduction claimed for this gift. This is considered a cost associated with completing the donor’s tax return. The donor will also be asked to pay the attorney fees for the drafting of the deed. Lastly, the donor is responsible for environmental assessments if they are needed.
This information is provided as an educational service to our donors and is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in any examples are for illustrative purposes only. State law may further impact your individual results.