William purchased his home many years ago for $80,000. The home is now worth $420,000. He wants to sell his home and buy a smaller home for $130,000. If William sells his current home and uses his one-time $250,000 home exclusion, he could offset part of the gain but would still have to pay capital gains.
William: My home has been a wonderful investment. My late wife and I raised our kids there, but it was getting more difficult for me to keep up with the yard work. I wanted to sell my home and move to a smaller house. With fewer responsibilities, I would be able to spend more time with my grandkids.
William talked to the Catholic Foundation of Eastern Montana, who told him he could sell the home, avoid the tax and make a generous gift to benefit the Church.
William: I learned a lot from my conversation with the Foundation. They told me that I could sell my home to them for $130,000, which would give me the money I needed to buy the new house. The Foundation would take the balance of the value of my current home, around $290,000, to fund a Charitable Gift Annuity that would give me both a tax deduction and provide me with fixed payments for the rest of my life.
William transferred his home to the charity in exchange for the Charitable Gift Annuity. The gift annuity produced a nice tax deduction and Montana EndowmentTax Credit
that William used to offset the gain on the sale portion to charity. He also used the home exclusion to offset the remaining capital gains associated with the payments he received from the annuity.
William: Using my home to fund the gift annuity was the best decision I could have made. I avoided tax on the sale of my home and really enjoy the benefits of the large annuity payments. And, because the payments are fixed, I don't have to worry about market fluctuations. Best of all, I helped the Church, which was an important part of what I wanted to do in my wife's memory.
Is a charitable gift annuity for real estate right for you?
If you own highly appreciated property, such as real estate, you could benefit from using the real estate to fund a Charitable Gift Annuity. The annuity, coupled with the use of a home exclusion, could help you avoid capital gains, provide you with a charitable income tax deduction and Montana Endowment Tax Credit
in the year of the gift and could increase your income.
Please call us if you have questions about Charitable Gift Annuities. We would be happy to answer any questions that you have.
*Please note: The name and image above are representative of a typical donor and may or may not be an actual donor to our organization. Since your gift annuity benefits may be different, you may want to click here to view a color example of your benefits