Many gifting options exist if you are considering donating your home, second home, commercial building, raw land, farm, or other real estate to Carnegie Mellon University.
A gift of real estate could be right for you if:
- You own real estate for which you no longer want to be responsible.
- You are willing to donate your home, if you can continue to live in it.
- You own real estate that you are willing to sell to Carnegie Mellon for a bargain price.
- You own real estate that you are willing to donate if you get income in return.
- You want to save income taxes.
- You want to make a generous gift to Carnegie Mellon.
How it works
Here are some common techniques for making a gift of real estate to Carnegie Mellon:
- Give your real estate now.
- Give your home now, but continue to live in it as long as you wish.
- Give your real estate now and receive payments of income for life.
- Give your real estate through your estate after your death.
- Give a portion of your real estate and keep the rest.
- Sell your real estate to Carnegie Mellon for less than its appraised value.
The common techniques for making gifts of real estate are each briefly described below. We would be happy to discuss with you which technique might be best for your particular situation and goals.
Transfer your real estate to us outright
Transfering real estate outright is the simplest way for you to give Carnegie Mellon University a piece of real estate. By giving CMU all rights to your real estate, you will maximize your support of Carnegie Mellon and you will earn an income tax deduction equal to the full appraised value of your real estate.
Sell your real estate to CMU for less than its appraised value
When you sell Carnegie Mellon your real estate in a "bargain sale" arrangement, you will enjoy several benefits. You will receive an immediate cash payment equal to the sale price and an income tax deduction for the difference between your sale price and the appraised value of your property. You will also avoid capital gains tax on your gain in the gift portion of the arrangement. Visit our Bargain Sale webpage for more details.
Give your home to Carnegie Mellon, but continue to live in it as long as you wish
When you give your home to Carnegie Mellon subject to a "retained life estate," you can continue to live in your home for as long as you wish, such as for your life, or for the lives of you and your spouse. You will earn an immediate income tax deduction for a portion of the value of your home. You also can make a retained life estate gift using a second home, farm, or any structure you use as a personal residence.
Give your real estate now to CMU and receive variable payments for life
Using a gift arrangement called a "flip unitrust," you can give your real estate to CMU now and start receiving payments as soon as your real estate has been sold. Your payments will vary with the value of your flip unitrust. Payments equal to 5% or 6% of trust value are typical. You will also receive a substantial income tax deduction. In addition, there will be no immediate capital gains tax on the sale of your real estate.
Give your real estate to Carnegie Mellon now and receive secure fixed payments for life
Using a gift arrangement called a "deferred gift annuity," you can give your real estate to CMU now and receive income payments of a fixed amount starting on the date you choose. The payment amount will depend on your age and how long you wait before payments begin after your donation. Payments are backed by the general resources of Carnegie Mellon University for life and typically are partially tax-free. You also will receive a substantial income tax deduction and avoid or defer capital gains tax.
Give Carnegie Mellon a portion of your real estate holding
Rather than give CMU all of your real estate holding, you can give the University an "undivided interest." For example, if you own 100 acres of farm land, you could give CMU 50 acres. You will receive an immediate income tax deduction for the value of the portion you give to Carnegie Mellon. You will, of course, retain complete control of the portion of your real estate that you choose to keep.
Give your real estate through your estate
By making a gift of real estate through your estate, you will retain use of your property during your life. Additionally, you can change your gift plan whenever you wish, should your circumstances or priorities change during your lifetime. Putting your gift of real estate into your estate plan now helps assure that your wishes will be carried out later. You also reduce the size of your taxable estate.
Special considerations when giving real estate
Giving real estate to Carnegie Mellon requires some extra steps of which you should be aware. These steps include the following:
- You will need to establish the value of your property by obtaining a qualified appraisal. To be valid for claiming your charitable income tax deduction, your appraisal must be conducted no more than 60 days before your donation and no later than the due date, including extensions, of your next tax return.
- In addition to your appraiser's valuation, Carnegie Mellon will need to examine your property and conduct our own independent analysis of its value. For example, CMU will need to know if there are any debts, taxes, or liens owed on your property.
- Once CMU accepts your gift of real estate, the University becomes responsible for cleaning up any environmental problems your property may have. This sort of cleanup can be very expensive. Therefore, before Carnegie Mellon accepts any gift of real estate, the University routinely conducts a review to make sure the property has no environmental issues.
Hayden Lucas owns several buildings in his hometown. While the buildings have been a good investment for him over the years, he's ready to stop being a landlord. His properties have grown substantially in value, so he is concerned that he will have a substantial capital gains tax bill to worry about if he sells them. He would also like to show his dedication to Carnegie Mellon University by making a major gift.
One of Hayden's buildings is appraised for $300,000. He purchased it for $45,000. Hayden proposes that he donate it to CMU which will eliminate his concern over capital gains tax. After performing its own review of the property, Carnegie Mellon confirms that the appraised value is accurate and that the University has no environmental or financial concerns regarding Hayden's property.
- Hayden receives a $300,000 income tax deduction.
- Hayden saves an estimate of $111,000 in income tax and $51,000 in capital gains tax.
- Hayden is relieved of all responsibilities of owning the property.
- Hayden gains the satisfaction of providing substantial support to Carnegie Mellon.