Land & Business Gifts
Do you have appreciated assets (Real Estate, Business Interests, Rental Property, Stock, Vacation Homes, Business Assets, Property, etc.) but don’t want to pay taxes on the sale (capital gains tax, state tax, and others)? Appreciated assets are smart assets to donate because you can save money on your taxes and potentially provide income for yourself down the road. A gift of an Appreciated Asset does not have to include the whole asset and can provide you with valuable benefits.
Bill and Grace’s Real Estate Gift
Bill and Grace met while teaching high school early in their careers and had rewarding experiences working with students on many different levels. When they got married, they decided to keep Bill’s home and make it a rental property. They were very pleased with this investment and it provided good income over the years.
A few years ago, they both retired, and are enjoying traveling and spending more time with their grandchildren. They are ready to be done being landlords, and want to get a small condo as a second home near their grandkids. They were ready to sell the rental house, but the property was worth more than four times what they paid for it and they were worried about the taxes would be.
Their accountant let them know that beyond the capital gains tax, they would have to pay taxes on all the depreciation they had captured over the years and that this taxable event would require them to pay net investment income tax as well.
Bill and Grace knew that they wanted to create a scholarship at Phoenix College to make an impact through education. They met with the PC development director and their financial advisor to look at their planning options. Bill and Grace needed less than half of the value of the rental home to buy the condo near their grandkids. They decided to give half the property to Phoenix College, and they sold the home.
They were able to fund a scholarship, get a tax deduction (which saved them taxes on their half of the proceeds from the sale), and they were able to buy the condo they wanted. Bill and Grace were overjoyed with the gratitude and appreciation they received from the students they helped, and they had the freedom to travel and spend more time with their family.
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