Joe bought a farm for $100,000 twenty-five years ago. Now his children are grown and have all left home. Joe and his wife want to sell the farm and move to a smaller place. Since the fair market value of Joe’s farm is $700,000, he is facing large capital gains tax liability. He also wishes to give some of the proceeds from the sale to charity. How should he proceed?
Did you know there is a legal and efficient way that people like Joe can reduce or eliminate capital gains tax by gifting a portion or all of their real estate to charity? If Joe gifts the entire farm to charity prior to a sale, he completely avoids capital gains taxes. Alternatively, he has the option of gifting a portion of the farm to charity and selling his remaining interest. The buyer would then purchase both portions. The deduction from the gift to charity would offset all or part of the capital gains tax on the portion that he sells. This is made possible by gifting the real estate prior to the sale rather than giving cash after the sale.
Individual situations and tax brackets vary, producing different results. We will gladly review your situation and calculate the percentage you would need to gift to charity to offset your capital gains taxes. You will not be obligated to make a gift.
If you have questions or would like more information, contact us at CAM Foundation, P.O. Box 290, Berlin, OH 44610 | 330.893.4915 | bss@camoh.org.
