Two options when giving real estate

Real property values have been rising at a time when interest rates have remained low for an extended period. Financial assets have seen market values increase, too. Is it time to consider making a gift of your real estate to the Lord through WELS Foundation?

You may have a vacation property or undeveloped lot that has appreciated in value over the years. Did you intend to use it a lot more when it was purchased than you do now? It can be given through WELS Foundation to your church, synod, or another WELS ministry without incurring tax on that appreciation. Once we sell it, the value of your gift can be significantly more than had you sold it and donated after-tax proceeds of the sale.

Either way, your gift qualifies for an income tax charitable deduction, but it is typically lower if you sell first. Consider these possibilities for your appreciated real estate.

1. Give the entire property.

As a qualified charitable organization, WELS Foundation can sell the property without incurring capital gain. For example, a lot purchased for $10,000 in 1990 that appraises for $60,000 today would produce a $50,000 capital gain. Instead, a gift toward ministry through WELS Foundation of that same lot avoids the tax on the gain.

2. Give a portion of the property.

Imagine that giving the entire lot doesn’t make sense to you, but a smaller gift might. It is possible to give an undivided interest and accomplish similar goals, though to a lesser degree. A gift of an undivided one-half interest in that $60,000 lot today means that both you and your designated ministry will receive half of the sale proceeds when it sells. Today’s charitable deduction will help offset the capital gains taxes due on the portion that you kept.

More information

To learn more about gifts of real estate, contact your local WELS Christian giving counselor.