How To Donate Real Estate

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How To Donate Real Estate

How To Donate Real Estate

Did you know?

That 45% of our nation’s wealth lies in real estate, and that most charitable organizations will not even consider real estate as a donation?  That is until now – Sound Investments Group Holdings, Inc accepts charitable gifts of all types of real estate (except timeshares).  Beyond leaving a legacy to your community, donors can receive:

  • A significant tax benefit
  • Property management and maintenance relief
  • Cash through a bargain sale
  • A lifetime income stream back to you

Why donate Real Estate?

A donation of real estate to Sound Investments Group Holdings, Inccan reduce your tax burden and provide you with the benefit of savings that comes from relief of the maintenance of your property.

One of the many advantages to the donor is that the size of the tax deduction is determined by the current market value of the property, as opposed to the cost of the property when it was purchased (Moreover, by donating a property instead of selling it outright, donors may avoid paying brokers’ fees.)

In many cases, if one takes into consideration ongoing property taxes, maintenance costs, income taxes–or if the property is sold, the cost of legal fees, brokerage fees, estate taxes, inheritance taxes and capital gains taxes–it is often financially preferable to donate properties to charities. It also saves heirs the trouble of trying to divvy up the gains if the will is potentially contentious or inequitable. Sometimes there are intangible benefits as well.

You can also avoid capital gains tax on highly appreciated properties with your charitable donation of real estate.  Real Estate donations can provide you with highly beneficial tax results and allow you to achieve significant and important charitable goals that benefit those in need.  The benefits of an IRS tax deduction are quite an attractive prospect. And you can make a positive long-lasting difference for others less fortunate by donating to Sound Investments Group Holdings, Incso we can help to create affordable housing and employment for those which are unemployed.

You can significantly reduce your legal and tax liabilities on the properties you donate and more efficiently attain personal financial goals white also supporting our charities.

A Real Estate Donation, whether vacant land, industrial, residential, land contracts, commercial property or timeshare, provides you with a great way to enjoy what many consider an impressive tax deduction. If your real property asset has grown in value, or unfortunately turned into a non producing property in your portfolio, it may be the time to consider a real estate donation.

Real estate donations make good sense for both individuals and corporate donors. The equity from your real estate donation helps us continue to benefit the many commendable causes we support. Building Bright Communities, here to provide you with the know-how necessary to conduct a real estate donation that optimizes the benefits for both you, the donor and the charities we serve.

Who Should Donate Real Estate?

  • Anyone that owns real estate who wants to help improve the communities in which they live by leaving a legacy to charity.
  • Businesses with properties that are idle, lacking positive cash flow and are assets that will never reach any useable potential.
  • Properties which are fully depreciated that no longer serve the financial interests of the donor.
  • Uninsured properties where catastrophic event has made them more a detriment financially to continue to maintain.

How complicated and how long will the charitable donation process take?

Every property donation is unique and requires a coordinated effort from a team of knowledgeable professionals.  The donation process and timeline varies from property to property. There are many factors that can affect this process. Among these are a number of encumbrances ranging from civil liens to unpaid property taxes. Every effort is made to ensure that this is as simple and timely as possible from beginning to the final transfer of property title.

There are various donation arrangements that can be used to meet the individual needs of the donor including:

  • Outright gift
  • Bargain sale
  • Retained Life Estate
  • Charitable Remainder Trust
  • Charitable Gift Annuity

Sound Investments Group Holdings, Inchas assembled a team of professional who have completed thousands of charitable real estate donations, whose only goal is a win/win outcome for the donor and our charity.

How will I know if Building Bright Communities, willing to accept my charitable donation?

We accept all types of real estate including (land/lots, mobile homes, residential homes, multi-family units, commercial and industrial property) in all 50 states and some US Territories.  Upon the receipt of all documents and information, Sound Investments Group Holdings, Incwill be able to determine quickly if the property can be received as a charitable donation.

Who pays the expenses?

All expenses incurred during the process are generally accepted as the responsibility of the donor. There are exceptions to this and under certain circumstances; an agreement is made to share the expense of the acquisition of your charitable donation. (I.e. Title insurance, property insurance, environmental testing, probate or other issues and costs)

What costs can I expect to incur during the donation process?

Generally, the donor is responsible for all of the regular costs associated with the property until the acquisition of the property by Sound Investments Group Holdings, IncThis may include, but not be limited to all taxes, bills and mortgages. There are of course exceptions to this. Every donation is considered on a case-by-case basis.

What if I am missing important documentation?

Because closing the transaction usually takes place through a title company or another agent for the donor, such as an attorney, a title search will be performed so that all the necessary paperwork will be procured in order to proceed with the acquisition of the donation.

At what point will my responsibility to the Real Property end?

The donor’s responsibility stops at the end of the acquisition process.

Do I need to be present at the time of the closing?

No, at the time of the closing, all necessary paperwork has already been completed. The actual closing itself will simply be a paper transaction that occurs once all legal requirements for the transfer of your charitable donation have been completed. If there are any additional issues that arise, usually in regards to the title search, all parties involved shall be properly notified. Usually if this happens, it is just a simple matter of signing additional documents and the issues can be resolved before the closing.

What Can a Real Estate Tax Deduction Do For You?

Individual donors:

These rules may apply if the donated real property is owned in your own name, with your spouse or other persons. (Please check with your tax professional):

If you have held the property for more than one year, it is classified as long-term capital gain property.

You can deduct the full fair market value of the donated property. Your charitable contribution deduction is limited to various percentages of your adjusted gross income. Excess contribution value may be carried forward for up to five years. If the property has been depreciated, the fair market value must be reduced by its accumulated depreciation through the date of contribution.

Fair Market Value is most commonly determined by an independent appraisal.

If you choose to deduct your cost basis of the donated property you are allowed a deduction of fifty percent (50.00%) of your adjusted gross

Income (Please check with your tax professional).

Excesses can be carried forward up to five years. Which method you choose to follow is dependent on the cost basis in the property donated, your tax bracket, the age and health of the donor and whether you plan to make future contributions (Please check with your tax professional).

Corporate Donors:

The following rules apply if your charitable donation of real property is made by a corporation:

If you have held a controlling interest in the corporation and the property has been held for more than one year, the corporation may deduct up to ten percent (10.00%) of the net profit of the corporation (Please check with your tax professional).

Excess contribution amounts can be carried forward up to five years. The fair market value here must be reduced by the amount of accumulated depreciation.  If the corporation has elected “Sub.S” status, then the contribution allowed will be reported on the individual shareholders K-1and may be deducted on the individual return (Please check with your tax professional).

Partnerships, S-Corporations and Limited Liability Companies

The following rules may apply if your contribution is being made by a partnership, S-Corporation or Limited Liability Company:

The corporation may not claim a deduction for the property donated. Rather, the contribution passes to the individual shareholders on a prorated based on their percent ownership in the S-Corporation. The shareholder can claim this deduction on their individual tax return. The same limits and carry forward rules will apply (Please check with your tax professional).

Partnerships and Limited Liability Company contribution rules are the same as S-Corporation with one exception, the partners or members can claim a deduction even if they have no basis in the partnership or Limited Liability Company. Please check with your tax professional.

Commercial Property Donation – Donate Commercial Real Estate

Donate commercial property and improve performance! Commercial property, whether held by a commercial entity, a company or business, or a private individual-should be an asset. Far too often, however, commercial property becomes more of a liability and a financial drain. In cases such as this, the situation can be turned on its head: donate commercial property that is not performing and enjoy a number of financial benefits.

Operations From Red To Black Again

If you are holding an un-performing or underperforming commercial property, you probably know the many ways that property is hurting your financial bottom line. The property holding alone could be the one reason that your company or business is not turning a profit. You may be thinking, as many commercial property holders are, that if you could just unload that burdensome property, you could get your business back in the black.

Fortunately, changes to charitable donation laws make it possible to donate commercial property, unload property burdens, and still benefit financially in the end. Not only will the cost of owning and maintaining a commercial property disappear when you donate commercial property, but significant tax advantages can be enjoyed as well.

Current Market Value Tax Deduction

The donation of commercial property qualifies you or your business for a tax benefit based on the current fair market value of the property – not on the purchase price of the property.

Deductions vary according to the structure of your organization, and we are here to help clarify the tax advantages of donating commercial property to charity (it is also recommended that you discuss this with your own tax advisor).

Enjoy These Benefits when you Donate Commercial Property to Charity:

  • Tax Deduction Sizable, lasting tax benefits / deductions for years to come
  • Tax Deduction Freedom from property taxes
  • Tax Deduction Freedom from property maintenance and other obligations
  • Tax Deduction Freedom from liability and insurances
  • Tax Deduction Benefit of knowing that you/your business has helped others
  • Tax Deduction Positive face forward to the public for your generous company
  • Tax Deduction Peace of mind knowing that your commercial property is not longer a drain or burden

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