Real Estate

Land, Houses and other Property

Giving Real Estate

Quite often the wealth with which God has blessed us comes in the form of real estate. In fact, studies show that anywhere from 35 to 60 percent of people's net worth is held in real estate.

Gospel for Asia's Harvest Foundation partners with Servant Christian Community Foundation (SCCF) to accept direct gifts of unencumbered real estate. Such gifts can provide you with a far greater tax deduction than if you sell the real estate yourself and then donate the proceeds to GFA. SCCF will handle the administrative burden by receiving, managing and selling the asset for you, and then placing the net proceeds into the Harvest Foundation. From the Harvest Foundation, your gift will be used according to your designation(s).

A Real Estate Gift Example

Suppose Bob and Joyce invested in real estate 25 years ago by purchasing property for $5,000. Since then, the real estate has grown to have a fair market value of $250,000.

A buyer has approached them to buy the real estate. But instead of selling the real estate to the buyer, paying the taxes and giving away the net proceeds to GFA, Bob and Joyce decide to give the real estate directly to the Harvest Foundation. (They wisely make this gift before signing any letter of intent, binding contract or other formal agreement with the buyer.)

Assuming Bob and Joyce are in a 35 percent federal tax bracket and a 6 percent state tax bracket, here's the impact of their decision:

No capital gains tax. Bob and Joyce avoid capital gains tax and save $51,450 (21 percent of $245,000) in federal and state income taxes.
Charitable income tax deduction. Bob and Joyce get a charitable income tax deduction (subject to the 30 percent limit of adjusted gross income) of $250,000, the fair market value of the real estate. Their cash flow increases by $102,500 (41 percent of $250,000), the amount of their federal and state income tax savings, and they can carry over any unused portion of their $250,000 deduction for the next five years.
Maximized gift. Bob and Joyce are able to give $250,000 to GFA instead of the $198,550 they would have had if they had sold the real estate and donated the net proceeds. They will avoid the tax bill of $51,450 and instead give this amount to GFA through the Harvest Foundation!
Lower out-of-pocket costs. Bob and Joyce's out-of-pocket cost of the $250,000 gift is $147,500-far less than the $168,595 they would have paid if they had sold the real estate and then given away the net proceeds.

Another example:

George and Sue bought a piece of property 30 years ago for $50,000. This year, it was worth $500,000, and they wanted to sell the asset and then give the proceeds to Gospel for Asia. Doing so, however, would have sent $94,500 to the federal government in capital gains taxes, and reduced their gift to $405,900.

When George and Sue learned about Gospel for Asia's Harvest Foundation, they decided to give their property before selling it. This increased their gift (and charitable deduction) to $500,000, which saved them $205,000 in income taxes (Assuming a 35% federal and 6% state tax bracket).

The extra $94,500 went to further the work of Gospel for Asia, and their charitable deduction provided a tax refund of $38,745 (based on their income and other deductions) which George and Sue used to help put their son through college.

Here's how it works:

As you and your advisor decide that a gift of real estate is appropriate in your financial and philanthropic planning, submit the following documents to SCCF:

Copy of current deed
Boundary survey
Last tax assessment notice/tax bill paid
Current insurance coverage
Copy of title insurance policy
Current appraisal
Any agreements associated with property
Phase I environmental inspection report

Provided by SCCF:

Real Estate questionnaire
Indemnification agreement
Environmental questionnaire

When the transfer document is executed, your gift date is established. Additional items, such as an appraisal and Form 8283, may need to be completed after the gift has taken place.
SCCF will then work towards the sale or ongoing management of the asset as appropriate.
Upon sale of the asset, the net proceeds will be placed in Gospel for Asia's Harvest Foundation.
You may recommend grants from the Harvest Foundation for the ministries within Gospel for Asia that God has placed on your heart such as Bibles, native missionary support, church buildings, radio programs or where most needed.

What makes your asset an appropriate gift? The asset:

Has been held by you longer than one year
Has appreciated in value
Is transferable (not under contractual obligation or other agreement with someone else)

What else do you need to know?

An appraisal may be needed in order to substantiate the value of your tax deduction
Upon sale of the asset, SCCF retains a portion of the proceeds to support the ministry work of SCCF
At sale, SCCF places approximately 92 to 98 percent of the net proceeds into the Harvest Foundation for distribution to the various ministries of Gospel for Asia
It is best to donate complex gifts before signing any letter of intent, binding contract or other formal agreement with a potential buyer

For more information:

If you have any questions or wish to start the process for your gift, please fill out the contact form, or call Gospel for Asia's Harvest Foundation at 1-800-WIN-ASIA (1-800-946-2742).

DISCLAIMER: This information is designed to provide information and illustration of the subject matters covered. It is not intended, nor should it be used as legal, accounting or other professional advice. It is always a good idea to seek legal and tax advice from your professional advisor(s).