Suppose you no longer need some property you own...or the property has become a burden to manage...or it fails to yield a decent income. Maybe you would like to sell it, but you might incur a hefty tax on your capital gain. Perhaps you have considered donating the property, but not until after your lifetime.
Establishing a Planned Gift of Real Estate Can Benefit You in Many Ways
A planned gift of real estate offers unusual opportunities for you to achieve your personal financial goals. Here are some possibilities.
For an outright gift of unencumbered real estate held long-term (longer than a year), you are entitled to an income tax deduction for the full, present fair market value. We take on the responsibilities of ownership, including the option to sell the property, upon receiving your gift. An example of this type of gift to MICA is the bequest made to the College by Reuben Kramer ‘32 of his home on Mosher Street for its use as a visiting professor's residence.
Retention of your home.
You may want to continue living in your home for your lifetime (with life use for your surviving spouse, too). You can still make the gift, deeding the property to us subject to your specifications about occupancy. You get a sizable, current income tax deduction based on the value of the property and your age (and your spouse's age). Recently, a Baltimore artist and philanthropic neighbor informed MICA of her intention to bequeath her Charles Village home to the College. Her gift was inspired by a mural in her home painted by former faculty member Joe Lazarro, reminding her and visitors to her home each day of the creativity and artistry that characterizes MICA's community. As she stated when making her gift, "You don't have to be a MICA graduate to want to give to the arts."
A life income.
You may be managing a rental property that you would like to sell, however, after taxes and expenses, the yield resulting from the investment of the proceeds would be disappointing.
Your sale of this property could benefit you and MICA through using the proceeds to fund a trust that would provide you with a life income, and providing MICA with a valuable asset at the time of your death.
Making a Gift of Real Estate is Easier than You May Think
The following examples show the variety of possible gifts and the valuable tax and income benefits you may derive from contributing real property.
Making a bequest of your primary residence.
In your will, you can donate your home to MICA. In one such example, a donor, MICA faculty member Allegra Marquart, stipulated that 50% of the proceeds of the sale of her house will go to MICA.
A gift of land.
You decide to deed to MICA a parcel of land, which MICA then sells. By giving this land, you avoid the tax on the capital gain and are entitled to a deduction on your federal tax return. Since the total charitable deduction is more than you can deduct in the year of you gift, you can deduct the excess during the next five years.
A seasonal home.
While contemplating a major donation, you realize that you no longer need your vacation home. You arrange to sell the property to MICA for the original cost of the property. This bargain sale entitles you to a tax deduction equal to the fair market value less the bargain sale price.
Establishing Your Legacy
The provisions of your estate plans should reflect the priorities and values of one person, and one person only - you. Allegra Marquart expressed this sentiment best when explaining why she chose to establish a planned gift to MICA of real estate. "MICA, and the friends I have made here, are my extended family. This community has both nurtured and challenged my artistic explorations. They have applauded my successes and provided understanding and encouragement along the way. I want MICA to continue to progress and to succeed. I want to do what I can to take care of my family."
For more information on the benefits of donating real estate to MICA:
Alison Wainwright Davitt
Associate Vice President for Development & Constituent Relations
Office Telephone: 410-225-4219