In many regions of the country, real estate has been a wonderful long-term investment. In other cases, it has lost its usefulness or has become too expensive or cumbersome to maintain. If this is the case, we encourage you to consider using real estate to support your favorite college or program at Florida State University.
The benefits of making a real estate gift include:
- Eliminating long-term capital gains tax on an appreciated asset;
- Receiving a charitable income tax deduction based on fair market value;
- Avoiding the time, effort and expense of owning property; and
- Supporting your favorite program at FSU.
Gifts of real estate, such as undeveloped land, a residence, a vacation home, a farm or commercial property, should be arranged through the Office of Planned Giving and made through Florida State University (FSU) Real Estate Foundation. The FSU Real Estate Foundation requires the donor to bear certain costs when making a real estate gift, such as an appraisal to determine the fair market value. Also, the Real Estate Foundation deducts transaction costs from the proceeds of the sale of the property, including the closing costs, title insurance, a survey (if needed) and any taxes due before the gift is completed.
Real estate can be given through outright gifts and by making deferred gifts.
Outright Gifts of Real Estate
The most popular way to make a gift of real estate is to transfer the property’s deed to Florida State University Real Estate Foundation. Upon making an outright gift of real estate, the donor is entitled to a charitable income tax deduction for the appraised value of the property. In most cases, donors can avoid any capital gains tax that would be incurred by selling the property themselves. The deduction available equals 30 percent of the donor’s adjusted gross income in the year the gift is made. It is also possible to carry over any unused deduction for five consecutive years.
In most cases, the donor intends to support a particular academic unit on campus. In these situations, the Real Estate Foundation will oversee the sale of the property. Once the sale is complete, the FSU Real Estate Foundation will transfer the proceeds to the FSU Foundation, who will deposit and invest the proceeds in a manner that supports the donor’s specific intent.
Using Real Estate to Make a Deferred Gift
Some donors are interested in donating real estate, but they also have a need for income and/or use of their homes during their lifetimes. Under the right set of circumstances, the options described below can provide a significant gift to the university as well as financial security for the donor.
Retained Life Estate
If you would like to receive a current income tax deduction for the gift of your home, but want to continue living there for the rest of your life, you can give the university a “remainder interest” in your home and retain a “life estate” for yourself. Donors who choose to make gifts of life estates continue to maintain the property while they are living in it, which includes paying taxes and the cost of any insurance. If at any time you decide to relinquish the life estate, you may do so. If you wish, you may designate how FSU will use the proceeds received from the ultimate sale of the property.
Charitable Remainder Unitrust with Flip Provision (FLIP CRUT)
The Flip CRUT is an income-producing vehicle that can be funded with unencumbered real estate. After donating property into the trust, the property is sold, thereby generating assets that can be used to make income payouts to the donor or a family member for life or for a period of years. The income payout is based on the sales price of the property that was donated into the trust. The Internal Revenue Code has specific rules in place that dictate how these trusts are invested.
Some of FSU’s most significant gifts have come from the estates of our donors. In some cases, the donors have bequeathed real estate to FSU for the purpose of supporting an academic program. As a general rule, the FSU Real Estate Foundation will request that an executor or trustee liquidate the real estate and then distribute the proceeds to the FSU Foundation. However, in certain circumstances, it may be appropriate for a donor to bequeath a specific piece of property to the FSU Real Estate Foundation.