Almost any type of real property, a personal residence, a farm, a vacation home, a commercial building, or an undeveloped parcel of land can be an important gift to Mercyhurst University. Gifts of real estate may be made either outright or through a tax-advantaged life income vehicle. You may gift all or a percentage of your real property to the University, and your gift may be given during your lifetime or through your will.
If you give your real estate outright to the University, you will be eligible for a charitable income tax deduction based on the full fair-market value of the real estate you give. You will avoid the capital gains tax you would have had to pay if you had sold the property, and you will have made a generous gift to the University. Also, because you have removed the property from your estate, you have also reduced your estate taxes. The University requires the donor to bear certain costs when making a real estate gift, such as an appraisal to determine the fair market value.
Retained Life Estate
If you want to receive a current income tax deduction for the gift of your home, but would like to continue living there for the rest of your life, you could give the University a “remainder interest” in your home and retain a “life estate” for yourself. You will be eligible for a current income tax deduction based on the value of the remainder interest you have given, and you will have the right to live in your home for the rest of your life. Only after your death will the University assume the usual ownership rights in the property.
How it Works:
- Transfer title to personal residence or farm to Mercyhurst University
- Mercyhurst University allows you (and spouse) to remain in residence for life
- You (and spouse) occupy and maintain residence
- Mercyhurst University uses or sells property after your death(s)
By setting up your gift now, rather than in your will, you will receive an immediate income tax deduction for the present value of the University's future right to receive the property. You also can give an "undivided interest" in property that you own and receive an immediate income tax deduction. For example, you could make the University the owner of a 50 percent interest in your vacation home. The University's benefit is that, when the property is sold, the University will receive 50 percent of the proceeds. The sale can be during your lifetime or even after your death. And the real benefit to you is a deduction for about 50 percent of the value of the gift property. The deduction will reduce your current income taxes thus increasing your spendable income.
Disclaimer: Mercyhurst University does not provide legal, tax or financial advice. We strongly recommend that you consult professional advisors on all legal, tax or financial matters, including gift planning considerations. To ensure compliance with certain IRS requirements, we disclose to you that this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding tax-related penalties.