Give Your House, But Live There For Life
Many of our supporters can’t imagine living any where else but their current homes. Many would also love to make a major gift to the Alliance for the Arts but don’t have the means to make such a gift today. If this sounds like you, you may want to consider a charitable giving arrangement called a retained life estate.
How It Works
With a retained life estate, you deed a personal residence or farm to the Alliance for the Arts now. You retain the right to occupy the home for life and continue to pay real estate taxes, maintenance fees and insurance on the property. In addition, you can later decide to rent your home or make improvements to it. After your lifetime – and the lifetime of your spouse or another person you choose to retain rights to live in the home – we take possession of the property.
Retained Life Estate
You
Transfer the future interest in your property via the deed.
Receive an income tax deduction and remain in your home for life.
Alliance for the Arts
How You Benefit
- You get the satisfaction of using your home to make a significant gift to the Alliance for the Arts while retaining the right to live there for life.
- You qualify for a sizable income tax deduction in the year the gift is made. The amount of your tax deduction is based, in part, on your age and the value of the property.
- You can immediately deduct the amount of your gift up to 30 percent of your adjusted gross income and carry over any unused deduction for up to five additional years.
- The gift isn’t subject to capital gains tax.
- The property avoids federal estate tax (1) as long as the life estate was created for you and/or your spouse.
- If at any point you no longer wish to occupy the property, you can rent it to provide you with an additional source of income. Or, you can give the Alliance for the Arts the right to use the property for the rest of your life. This will provide you with yet another tax deduction.
Example: Ellie, 78 a widow, deeds her home to a qualified charitable organization, though she plans to live there for the rest of her life. The fair market value of the property is $200,000 (the house: $160,000, and the land: $40,000). Based on Ellie’s age and the value of her house, her accountant determines her income tax deduction to be more than $132,000.(2) After Ellie’s lifetime, the organization takes possession of the property.
Please contact us at (805) 449-2590 with any questions you may have about this way to support the Alliance for the Arts.
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(1)Currently federal estate taxes are repealed for all deaths that occur in the calendar year 2010. In 2011, estate taxes are scheduled to be reinstated for estates worth more than $1 million at rates up to 55 percent. Congress, however, is likely to address reinstating estate taxes sooner than 2011. What the final legislation will look like and when it might become effective is unknown at this point.
(2)Based on a 3.4 charitable midterm federal rate.
The information in this website is not intended as legal advice. For legal advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to income tax apply to federal taxes only. Federal estate tax, state income/estate taxes or state law may impact your results.