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Gifts of Real Estate

Does the prospect of capital gain tax curb your willingness or ability to sell an appreciated property?

A charitable exit strategy known as a charitable remainder Flip unitrust may be the tax-wise solution you are looking for. Additionally, there are several other charitable gift strategies that can help you minimize or avoid capital gain while achieving other personal, financial and tax goals.

When you want to keep an income, consider a:

Charitable Remainder "Flip" Unitrust

When gifts of real estate are involved, a particular charitable remainder unitrust known as a "Flip" unitrust is utilized.You may transfer your entire interest in a property, or a partial interest in a property, into the trust. The Flip unitrust can sell the donated property and pay no capital gain tax. The trust will pay income for life or a term of years to one or more beneficiaries. Once the trust terminates, the remaining assets are distributed to charity to be used as you have directed.

Flip Unitrust Payments A "Flip" unitrust initially pays a fixed percentage of the fair market value of the trust assets, or the net income, whichever is less. Then, beginning in January of the year following the year in which the property is sold, the method of payment changes, i.e., "flips,", and the unitrust will begin to pay a fixed percentage of the fair market value of the trust assets each year, regardless of trust income.

How You Benefit

  • Capital Gain Avoidance: The unitrust may sell appreciated assets without paying capital gain tax, leaving more money for investing than selling the property yourself.
  • Charitable Deduction: You may claim a charitable deduction for part of your gift.
  • Increased Income: Unitrust payments will often exceed the income you were receiving from the property.
  • Tax-Advantaged Payments: About 75% of your payment will be taxed as capital gain or qualified dividends.
  • Income You Can't Outlive: Unitrust payments are payable for life to one or more people.

Important Planning Considerations for Gifts of Real Estate

  • A gift of the real estate must occur before there is a binding sale agreement in place in order to secure the maximum capital gain tax benefits.
  • A gift of mortgaged property must be structured properly or the gift can result in unwanted tax consequences without proper planning. Please Contact Us if your property is subject to an existing mortgage.

Contact us

If you have any questions about gifts of real estate, please Contact Us. We would be happy to assist you and answer any questions that you have.

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