Susan and Kevin bought their first home, and then, years later, made plans to build a second home so that their children could spend their summers along the lake. However, as time went on, Kevin's job kept him in town and the children grew up before Susan and Kevin had the financial resources to build on the land.
Kevin: "Over the years, that property increased in value. It became worth much more than what we paid for it. We paid about $40,000 and it is now worth almost $200,000."
Susan: "With the children out of the house, we were thinking of selling the property. We had been wanting to give a large gift to our church to support a new building project, so we planned to donate 25% of the sale profits."
Kevin: "We were disappointed at the large amount of capital gains tax we would have to pay from the sale, but we no longer wanted to be responsible for upkeep of the land. I happened to be talking to a CPA at a community luncheon, and he mentioned that we could probably give almost twice as much to our church if we gave 25% of the property prior to the sale, instead of writing a check after.
We learned that we could give 25% interest in the property to the Foundation and designate the proceeds to go to our church. By avoiding taxes on that 25% of the sale, our gift to the church would be way larger. Plus, we would save on capital gains tax and get an income tax deduction."
Susan: "That is what we decided to do. By giving part of the property prior to the sale we saved the capital gains tax on that percentage. The charitable deduction on that offset a large portion of the tax on the $150,000 we received when the property actually sold. We are very pleased with the "double benefit" from giving the property, and our church received $50,000, a large portion of what they needed for the building project."
**Note: The name and image above is representative of a typical donor and may or may not be an actual donor to our organization. Since your benefits may be different, please contact us for more information.
