Of course, most generous type of gift involving real estate is to gift the property outright to MLR, either during life or as part of your estate planning process. And, unsurprisingly, an outright gift will produce the largest possible tax deduction.
A less well known fact is that it is often possible to donate a fraction of your ownership interest, when you are unable or uninterested in parting with the full value of the real estate asset. For example, it may be possible to donate a one-third interest in a parcel of real estate to MLR, and to receive a tax deduction for a charitable contribution as a result. This can be an attractive option for conservation-minded individuals who know their heirs are not interested in continuing to own the real estate, but who do not want to deprive those heirs of the bulk of the value of the asset.
This gift planning option gives rise to another version of the “zero tax” sale. By deeding a fraction of your undivided interest in your property over to MLR and then jointly selling the property to a third party, you can structure the transaction so that you obtain the maximum possible tax-free amount, by offsetting gain on the sale through a deduction for the contribution of the partial interest to MLR.
If you are considering a gift to MLR involving real estate, it is important to begin the dialogue with our gift planning staff as early in the process as possible. We will need to determine that we can accept the gift under our gift acceptance policies, perform due diligence, and ensure that we understand and can live up to your expectations for the property. Special considerations may be raised if the property has significant debt or environmental contamination issues.