Gifts of Real Estate

Real Estate Gifts

For many people, their real estate holdings are a valuable asset. These assets can also carry a high price: property taxes and maintenance costs, and capital gains tax if sold.

A gift of real property to Scouting America —residential, rental, vacation homes, farms, commercial, or undeveloped—may offer significant benefits. For example, you can take a charitable income tax deduction based on the fair market value of the property.

• Land held for more than one year is deductible at fair market value up to 30 percent of a donor’s AGI for the year. If held for less than a year, it is deductible up to 50 percent of AGI for the year, and the deduction is limited to the property’s cost basis. The five-year carryover rule applies here as well.
• Property with a mortgage or lien usually does not make a good gift. The tax deduction is reduced by the debt amount, and the donor is treated as receiving a similar amount in income, regardless of who is responsible for the debt.

Example of a real estate gift:

      A donor invested $20,000 in a property many years ago. It is now worth $100,000. If the donor gifts it to their local Council, he/she is entitled to a charitable tax deduction of $100,000 on their income tax return. In addition, he/she avoids $12,000 in capital gains tax owed if they sold the property.    

Before deciding to give real estate, you should know the following:

1. The appraised value of the property
2. Your basis and any debts or liens on the property.

Please discuss your property gift with our Development staff so there is a mutual understanding about whether the property will be used, sold, or if there are any environmental concerns.

Life Estate Gifts

You may plan to contribute a home, vacation home, or other property to Scouting sometime in the future but—for now—you still want to use the property. A life estate helps you do both. A Life Estate Gift grants Scouting the right to your property after your lifetime, but you retain the right to use and enjoy it for the rest of your life and/or the life of another. If the property is income-producing (e.g., from rent, crops, timber, etc.), you may also keep that income during your lifetime.

• If you make a life estate gift and later decide you no longer want to use your property, simply transfer your remaining rights in the property to the council. You’ll receive additional tax benefits at that time.
• The value of a tax deduction for a life estate gift is determined by the value of the land and the age of the life tenants. The older the life tenants, the larger the tax deduction.

You can donate real estate, receive a tax deduction, and still enjoy the property. 

Scouting has no right to use or possess the property until after your lifetime, but you still receive an immediate income tax deduction for part of the property’s value. Also, a life estate gift removes the property from your taxable estate, possibly saving estate taxes and probate costs.