For some individuals, a gift of real estate may be an attractive way of making a significant gift to UMF. If you are downsizing to a smaller home or have an unused vacation home or other property, you might find a gift of real estate to be practical and tax-efficient, either now or whenever the property is no longer needed.
You can make an outright gift of your current home, farm, vacation home or piece of property. If you have owned it for more than a year, you receive a tax deduction for the full current market value, as substantiated by a qualified appraisal, and you avoid capital gains tax on the appreciation.
Retained Life Estate
Retained life estate is a plan that allows you to transfer the title of your residence, farm or vacation home to UMF while retaining the right to live in it for the rest of your life as well as your spouse.
While you retain the right to live on your property, you continue to be responsible for all routine expenses: maintenance fees, insurance, property taxes, repairs, etc. If you later decide to vacate your property, you may rent all or part of the property and receive the income.
When your retained life estate ends, UMF can then use your property or the proceeds from the sale of your property.
The typical donor:
- Wants to make a gift while retaining the right to use his or her property.
- Has income he or she would like to offset with a charitable tax deduction.
- Does not desire to pass personal residence, vacation home or farm to heirs.
Gift features and benefits:
- Immediate income tax deduction.
- Full use of asset during life.
- Meaningful gift to charity.
- Reduction of gift and estate taxes.
Note: Please consult legal and tax advisors before making any decisions based on this information. A gift of real estate must be in accordance with University of Maine System and IRS requirements.
To make this gift:
1. Start by having a conversation with UMF’s advancement office as we need to determine if UMF can use or easily sell the property. Prior to that conversation, you need to consider several points:
- there are no easements on the property.
- you have clear title to the property.
- the property has no environmental hazards.
- you will need to pay for a qualified appraisal.
- you will be able to maintain all routine upkeep expenses.
2. We will visit and evaluate the property for acceptance. (Note: All acquisition of real property with a cost exceeding $50,000 must be approved by the University of Maine System Board of Trustees prior to transfer of title).
3. You meet with your financial and legal advisers to evaluate the option, and contact an independent appraiser to review the property.
4. You make a final review and sign the appropriate legal documents with your counsel and UMF, creating your agreement.