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AVOID CAPITAL GAINS TAX WHEN SELLING YOUR REAL ESTATE
Consider a Charitable Trust with City of Hope if you would like to:
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EXAMPLE: INCOME AND TAX DEDUCTION FROM DONATED REAL ESTATE
APARTMENT BUILDING CURRENT INCOME
–
– –
–
APARTMENT BUILDING OUTRIGHT SALE
$2,500,000
($107,500) ($478,500)*
–
APARTMENT BUILDING CHARITABLE TRUST
$2,500,000
($107,500) –
$1,221,875**
Sales Price
Sales Cost
Estimated Capital Gains Taxes
Charitable Income Tax Deduction
Net Proceeds – $2,392,500
$2,392,500
Total Amount to Invest
– $1,914,000 $2,392,500
Net Annual Income
$95,000*** $95,700*** $119,625***
*Estimated blended Federal/CA Long-Term Capital Gains Tax Rate of 33.93% with an estimated cost basis of $982,000. The estimated capital gains tax liability is $478,500.
**The charitable deduction is based on the appraised value at the time of the transfer into a charitable trust as well as the ages of the donors, which are 83 and 70. The $938,350 charitable deduction can be used in the year of the gift and any unused portion can be carried forward for up to five years.
***The net annual income represents a 3.8% return based on the property value of $2,500,000. For this comparison, the estimated net income from the outright sale is based on a 5% investment return. The 5% rate of investment return for the Charitable Trust is based on its annual value.
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APRIL 2022 - APARTMENT MANAGEMENT MAGAZINE
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Sell your property and avoid capital gains tax on the transfer.
Receive lifetime income for yourself and/or other beneficiaries, including adult children.
Retire from being a landlord.
Avoid the need for a 1031 exchange.
Make a difference in the lives of people with cancer, diabetes and other serious illnesses.
To learn more, contact Michael Rorman, or a member of our team, at 800-232- 3314 or plannedgiving@coh.org.
City of Hope’s expert Planned Giving team has helped many people create meaningful gifts with a charitable trust.
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