Real Estate

Rotunda aerial header

Real Estate

Overview

Make an Impact While Maintaining Liquid Assets

If your vacation home, vacant lot, farm, or office building has lost its usefulness or become difficult to maintain, the property could make an excellent gift. Real estate can be contributed outright or used to finance a planned gift. Available options include a retained life estate, which allows the donor to continue to use the property for a certain number of years or for the donor’s lifetime. Other arrangements offer special tax advantages and lifetime income.

Making a gift of real estate to the University:

  • May qualify you for a federal income tax charitable deduction
  • Eliminates capital gains tax
  • Eliminates maintenance costs, property taxes, and insurance
  • Frees you from the need to sell the property

Real Estate

What Are My Options for Donating Real Estate?

Make an Outright Gift

If you give your real estate outright to the University, you will be eligible for a charitable income tax deduction based on the full fair market value of the real estate. You will avoid the capital gains tax you would have had to pay if you had sold the property.

A generous gift of real estate can help the University uphold its high standards of honor and academic rigor, offer an outstanding student experience, and provide opportunities for public service.

Example:

Sam wants to make a gift to support the University, but many of his assets are illiquid. The undeveloped land he bought several years ago for $10,000 was recently appraised for $100,000.

If Sam sells the land himself, he will owe $13,500 in capital gains tax and pay the expenses of sale, but if he gives the land to UVA, he will not recognize any capital gain, will be eligible for an income tax deduction for the land’s full $100,000 fair-market value, and will have removed the value of the property from his estate. Most importantly, Sam will have made a meaningful contribution to his designated school or program at the University.

Fund a Charitable Remainder Trust

Real estate can be used to fund a special kind of trust called a “Flip” Charitable Remainder Unitrust (“Flip CRUT”). A “Flip CRUT” document is drafted and your property is transferred to the trust. Once the property is sold, the trust will provide you with annual payments for the rest of your life or for a term of up to 20 years. Prior to the sale, any income the property may generate will be distributed to the income beneficiary from the CRUT. Payments from the trust are based on a set percentage between 5% and 7% of the total trust value each year. These payments begin on January 1 of the year following the sale of the property. In addition, you will be eligible for an immediate income tax deduction.

At the end of the trust term, the remaining assets will pass to the University to be used for the purposes you designate. You will also have removed the assets from your estate, eliminating any estate tax which may otherwise be due.

Example:

Joyce owns a parcel of land, purchased for $250,000, which recently appraised for $500,000. At 60, Joyce is ready to retire and wants to supplement her income. If she sells the property, she will incur $73,500 in capital gains tax, realtor fees, and other expenses.

Instead, Joyce transfers her land to a 6% “Flip CRUT.” She is eligible to claim an immediate income tax charitable deduction of $161,155 and will receive quarterly income payments for life. When the land is sold, Joyce will receive an annual 6% “unitrust” payment. At her death, the remaining assets in the trust will be distributed to the University for the purposes she has designated.

Make a Gift Through Your Will or Living Trust

Some of the earliest gifts to the University have been gifts of real estate given through bequests in wills and living trusts. Designating the University a beneficiary of a gift of real estate in your will could save your estate thousands of dollars in taxes. Your bequest of real estate may be designated for the University’s general use or for support of any of the 11 University schools or numerous programs. We encourage you to let us know about your bequest. Sharing this information helps the University fully understand the vision behind your intentions and ensures that there is a plan in place for implementing them.

Give the Remainder Interest in Your Home

If you want to receive a current income tax deduction for the gift of your home to the University, but you would like to continue living there for the rest of your life, you could give a “remainder interest” in your home and retain a “life estate” for yourself. You will be eligible for a current income tax deduction based on the value of the remainder interest you have given, and you will retain the right to live in and maintain your home for the rest of your life.

Give a Fractional Interest

On a case-by-case basis, the University may accept a gift of a fractional interest in real estate. You will be eligible for a charitable income tax deduction equal to the appraised value of the interest you transfer.

The University of Virginia does not provide legal, tax, or financial advice. We strongly recommend that you consult professional advisors on all legal, tax, or financial matters, including gift planning considerations. To ensure compliance with certain IRS requirements, we disclose to you that this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding tax-related penalties.