Charitable Gifts of Real Estate

Providing choices and benefits

Anabaptist Foundation works with donors to facilitate gifts of real estate.

How it works

You may donate all or a portion of property you own to Anabaptist Foundation. The foundation handles the sale of the property and the proceeds are placed in the gift plan that best fits your situation. You avoid paying capital gains tax on the property, and you get an immediate charitable income tax deduction.

Advantages for donors

• Flexibility – An entire property or just a portion may be donated. The property to be given may be farmland, residential, commercial, or investment property. Proceeds from the sale of the property can be placed in a charitable trust or charitable gift fund.
• Freedom – The foundation takes responsibility for management and sale of the property. Proceeds from the sale can be placed in a charitable gift fund or a charitable trust. You make recommendations on what charities should benefit from distributions from a charitable gift fund whenever you wish. If your donation is placed in a charitable gift fund, the money is available for distribution to charities you recommend at any time you wish. If your donation is placed in a charitable trust, payments from the trust will be paid to you or your beneficiary as long as you live. The balance of the trust will be transferred to charities you recommend upon your death or the death of your beneficiary.
• Avoid capital gains tax – When appreciated real estate is donated, the donor does not have to pay tax on capital gains. This leaves more money to go to charity.
• Immediate tax deduction – In the year the gift is made, you get a federal income tax deduction for the fair market value of the property held long term, up to 30 percent of your adjusted gross income. Any deduction you qualify for above this limit may be carried forward for up to five successive years.
• Privacy – If the donor wishes to give anonymously, the foundation can act as a screen between the donor and recipient charities.

A gift of land

Ken and Barbara Miller own a 22-acre tract of land which they purchased 15 years ago for $18,000. Their local congregation is planning to build a fellowship hall, and the Millers wish to contribute. They would like to sell the land, but since the land has appreciated in value to almost $90,000, they would be subject to capital gains taxes on about $70,000 of appreciation. In their financial situation, this would translate into a capital gains tax of over $10,000.

After consulting with an Anabaptist Foundation representative, the Millers donate the land to Anabaptist Foundation. The foundation sells the land and places the sale proceeds in a charitable gift fund. The Millers get an income tax deduction of $90,000 (fair market value of the property), which can be spread over five successive years, and they pay no capital gains taxes.

After the sale of the property, the Millers immediately recommend disbursement of $20,000 from the gift fund to their church's building fund. Over the next six years, they recommend that the remainder of the money be used for gifts to three different mission organizations and for annual contributions to the Christian schools that their grandchildren attend.

A gift of rental property

Peter Kolb began modestly and with his own two hands. The 26-year-old carpenter took on a small, dilapidated house on the edge of town as his first project. His Saturdays were filled with plumbing repairs, a fresh coat of paint, and landscaping the overgrown front yard. Although he had originally planned to resell this little “fixer-upper,” he kept it and rented it out. Two years later, he bought his second project house at auction and began exercising his skills there as well.

Although his beginnings were small, 60 years later his assets were of significant size. All 16 of his rental properties had been paid off for many years. Together they generated a significant income and had appreciated significantly in value. While Peter supported his local congregation faithfully from his income, he wanted to make a substantial gift in memory of his wife. With the help of Anabaptist Foundation, he arranged the gift of half of his rental units to the foundation for the benefit of the hospice that had cared for her before her passing. Selling the eight properties resulted in a gift of $1.25 million, a charitable income tax deduction for that amount spread over five years, and avoidance of more than $500,000 in capital gains taxes.