Real Estate Remainder Interest
A gift of a remainder interest in a personal residence or farm allows you to continue to occupy the residence or operate the farm without disruption. You get an income tax charitable deduction for the present value of the remainder interest. In computing this value, depreciation may be taken into account. This gift permits you to avoid any potential capital gain tax on the built-in appreciation.
In contrast, should the same gift be made to a unitrust, you must give up possession of the property. But a gift of a remainder interest provides a deduction that frees up tax dollars into spendable income without causing any disruption in lifestyle. Taxes, insurance, and normal maintenance remain your responsibility. You will be entitled to additional deductions upon making subsequent capital improvements.
Key benefits to remember:
- Improve your cash flow
- Make a substantial gift to Grand Rapids Community Foundation while retaining lifetime use of property
- Realize an immediate charitable tax deduction
- Avoid capital gains tax
- Enjoy a more favorable income tax position
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