A gift of real estate is a generous way of supporting the University without touching your bank account. When you give the University appreciated property that you have held longer than one year, you get a federal income tax charitable deduction, and you avoid paying capital gains tax. Additionally, you no longer have to deal with that property’s maintenance costs, property taxes, or insurance.
Another benefit is that you do not have to sell the real estate. You can deed the property directly to Northwestern or ask your attorney to add a few sentences in your will or trust agreement.
Ways to Give Real Estate
You can give real estate to Northwestern in the following ways. Click the + to learn more.
When you make a gift today of real estate that you have owned longer than one year, you obtain a federal income tax charitable deduction equal to the property’s full fair market value. This deduction lets you reduce the cost of making the gift and frees cash that otherwise would have been used to pay taxes. By donating the property to Northwestern, you also eliminate capital gains tax on its appreciation. Furthermore, the transfer is not subject to the gift tax, and the gift reduces your future taxable estate.
A gift of real estate through your will or living trust allows you to make a larger gift than you could during your lifetime while having the flexibility to change your mind should circumstances change. In as little as one sentence or two, you can ensure that your support for Northwestern continues after your lifetime and that your estate will benefit from a federal estate tax charitable deduction.
Perhaps you like the tax advantages a gift of real estate to Northwestern would offer, but you want to continue living in your personal residence for your lifetime. You can transfer your personal residence or farm to the University but keep the right to occupy (or rent out) the home for the rest of your life. You continue to pay real estate taxes, maintenance fees, and insurance on the property. Even though Northwestern would not actually take possession of the residence until after your lifetime, you receive an immediate federal income tax charitable deduction for a portion of your home’s value because this is an irrevocable gift.
If you are tired of the hassles of maintaining your property such as paying taxes, utility, and repair bills, consider, giving the property to Northwestern in exchange for reliable payments for life for you (and someone else, if you choose). When you arrange a charitable gift annuity, you are allowed a federal income tax charitable deduction in the year in which you set up the gift annuity when you itemize on your taxes. If you use appreciated real estate to make a gift, you can usually eliminate capital gains tax on a portion of the gift and spread the rest of the gain over your life expectancy. A gift of unmortgaged property to fund a deferred gift annuity is preferable and generates the greatest tax benefit.
Would you be interested in selling your property to Northwestern as a way to make a gift to the University? When you make a bargain sale, you sell your property to Northwestern for less than what it is worth. The difference between the actual value and the sale price is considered a gift to the University. A bargain sale can be an effective way to dispose of property that has increased in value, and it is the only gift vehicle that can give you a lump sum of cash and a charitable deduction at the same time.
You can contribute any type of unmortgaged, appreciated real estate you have owned for more than one year in exchange for an income stream for life or a term of up to 20 years. The donated property may be a residence (a personal residence must be vacant upon transfer), undeveloped land, a farm, or commercial property. Real estate works well with only certain variations of charitable remainder trusts. Your estate planning attorney or the Office of Gift Planning can give you more details.
Example of a Real Estate Gift
Janet purchased her home years ago and has watched it grow steadily in value. Still active in her career and traveling frequently, she’s beginning to find home ownership more and more of a hassle. At this stage of her life, Janet has decided to move to a condominium development, where all exterior maintenance is provided. Janet sees this as an opportunity to gift her existing house to Northwestern while realizing valuable tax benefits.
Janet qualifies for a federal income tax charitable deduction of $250,000, which is for her home’s fair market value today. She is able to claim 30 percent of her $200,000 adjusted gross income, or $60,000, in the year of the gift. In the five years following, she can continue to use up the remaining $190,000 deduction. Janet is happy in her new condo and loves knowing that the gift of her house will make a big difference supporting Northwestern.
- Contact Northwestern Gift Planning at 800-826-6709 or firstname.lastname@example.org to discuss the possibility of giving real estate to Northwestern.
- Seek the advice of your financial or legal adviser to make sure this gift fits your goals.
- If you include Northwestern in your plans, please use Northwestern’s legal name and federal tax ID number.
Legal Name: Northwestern University
Address: 633 Clark Street, Evanston, Illinois 60208
Federal Tax ID Number: 36-2167817
The information on this website is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes include federal taxes only. State income/estate taxes or state law may impact your results. Annuities are subject to regulation by the State of California. Payments under such agreements, however, are not protected or otherwise guaranteed by any government agency or the California Life and Health Insurance Guarantee Association. A charitable gift annuity is not regulated by the Oklahoma Insurance Department and is not protected by a guaranty association affiliated with the Oklahoma Insurance Department. Charitable gift annuities are not regulated by and are not under the jurisdiction of the South Dakota Division of Insurance.
This is not legal advice. Any prospective donor should seek the advice of a qualified estate and/or tax professional to determine the consequences of his or her gift.
Annuities are subject to regulation by the State of California. Payments under such agreements, however, are not protected or otherwise guaranteed by any government agency or the California Life and Health Insurance Guarantee Association.