Land, Houses and Other Property
Quite often the wealth with which God has blessed us comes in the form of real estate. In fact, studies show that up to 90 percent of people’s net worth is held in non-liquid assets, including real estate.
Gospel for Asia’s Harvest Foundation works with National Christian Foundation (NCF) to accept direct gifts of full or partial interest in 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. NCF will handle the administrative burden by receiving, managing or selling the asset for you, and then placing the net proceeds into GFA’s Harvest Foundation. From the Harvest Foundation, your gift will be used according to your preferences within the ministry.
A Real Estate Gift Example:
Note: This scenario represents an example of the benefits of donating personal property. It does not represent actual donors of GFA.
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 capital gain taxes and giving the net proceeds to GFA, Bob and Joyce decide to give the real estate to GFA’s 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 and savings. Bob and Joyce are able to give $250,000 to impact Asia for Christ from something that cost them $5,000 and earned them $102,500 in tax savings – a net gain for them of $97,500!
Here’s how it works:
- If you and your advisor decide that a gift of real estate is appropriate in your financial and philanthropic planning, contact GFA and we will ask NCF to send you a list of needed documents, including:
- Real estate questionnaire
- Indemnification agreement
- Environmental questionnaire
- NCF reviews the potential gift and, if it’s acceptable, submits a gift offer letter to you as owner.
- If you decide to proceed, a transfer document is drawn up, either by NCF or your legal counsel.
- When the transfer document is executed, the gift date is established, and NCF will work towards the sale or the ongoing management of the real estate donation as appropriate.
- When the real estate donation is sold, or as income is received from the management of it, approximately 95% of the net value will be placed in the GFA’s Harvest Foundation. The resources are then available for distribution within the ministry of GFA according to your project preferences (e.g. Bibles, National Missions, Bridge of Hope Program, radio programs or Where Most Needed).
Your real estate would be an appropriate gift if it ...
[NOTE: I can't highlight it, but the three points below have been changed from numbers to bullet points]
- 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.
- In advance of partnering with NCF, you will be asked to grant back to NCF 5 percent of the proceeds to support its ongoing ministry efforts with givers.
- 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:
For more detailed information about donating all or a portion of real estate you want to be sold or property you still want to manage, go to NCF’s Real Estate web page.
There you’ll also see a testimony of a farmer who donated a portion of his farm to help bring the love of God to other people!
If you have any questions or wish to start the process for your gift, please fill out our contact form, or call GFA’s Harvest Foundation at 800-946-2742.
All gifts are subject to Gospel for Asia's Gift Acceptance Policy.
DISCLAIMER: This web page 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).