Gifting Real Estate

Real estate gifts to Cal Poly can be structured in many different ways. Scroll down to read about:

Outright Gifts | Charitable Remainder Trusts | Retained Life Estates

Outright Gifts
A gift of real estate is a tax-wise method of providing support for Cal Poly because of the two-fold tax savings. A residence, summer home, farm, commercial property, or vacant land may have appreciated in value to the extent that its sale would result in a sizable tax on the gain. If given outright to Cal Poly, you can avoid this tax and realize a charitable deduction for the full fair market value. The property gift can also shelter your estate from future taxes.

Example of an Outright Gift:

Mr. and Mrs. Mustang, who are in the 31% income tax bracket, would like to make a charitable gift to Cal Poly. They have owned a rental home - now worth $250,000 - since purchasing it ten years ago for $100,000. By donating this property to Cal Poly, the Mustangs will receive a $250,000 charitable deduction, which saves them $77,500 in income taxes (31 percent). In addition, the Mustangs avoid the potential capital gains tax of $30,000 on the $150,000 appreciation
(20 percent).

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Retained Life Estate

An owner of a personal residence or farm may give the property to Cal Poly while retaining the right to occupy the home or operate the agricultural land. This gift vehicle provides an income tax deduction for the present value of the remainder interest.

Example of Retained Life Estate

Polly Royale has lived on the family farm for 40 years. Her will includes a provision that Cal Poly will receive the farm at her death. This arrangement does not provide any current tax deduction for her. As an alternative, Mrs. Royale decides to give the farm to Cal Poly now, while retaining the right to live on the property for life. Given the farm’s current value of $500,000, she will be entitled to a current income tax charitable deduction of over $240,000, which is the value of Cal Poly’s remainder interest. By creating the retained life estate, Mrs. Royale accelerates her gift and enjoys a large tax bonus without changing her lifestyle.

Charitable Remainder Trust

A charitable remainder trust is a life income arrangement that enables you to convert appreciated real estate into an income stream through an irrevocable gift of the property. Once in the trust, the property can be sold tax-free and reinvested into a diversified portfolio. As a result, the full fair market value of the donated property is available to provide income during your lifetime, while also generating an income tax deduction equal to the present value of your future gift.

Example of a Charitable Remainder Trust

Amy Green, age 67, owns undeveloped land that has increased tremendously in value. The land generates no income and is a cash-flow drain because of real estate taxes. Amy faces capital gain taxes if she sells the property to reinvest for income, or eventual estate taxes if she keeps the property. After working with Cal Poly's planned giving staff and her own attorney, Amy uses the land to establish a charitable remainder trust. The trust will pay Amy a 6 percent income for life and then distribute its assets to Cal Poly after her death. The trust provides a current tax deduction, avoids capital gain taxes, and removes the land from Amy’s estate.

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