Can I donate just a portion of equity? – YES.
If you own real estate and are inspired by the idea of putting land back into the Public Trust, and providing affordable housing for future generations, consider donating part or all of your property to CSCLT.
ARE THERE DIFFERENT POSSIBLE WAYS OF DOING THIS?
Yes, there are many options you may consider:
Each option has advantages depending on your needs, goals, and financial situation. There are tax advantages to each possibility, and we recommend you consult with your tax accountant or attorney to decide which best matches your situation. CommonSpace CLT is open to being creative with possibilities — as we are all in this together. By contributing your property to CSCLT, you will experience the satisfaction of contributing to a growing movement changing the way our society views private property and how we live together.
Outright Donation of Property:
Owner donates a home, building, or vacant parcel (or sells at below-market price) to the Community Land Trust, which can then be used for affordable housing.
When you donate a piece of property outright to the Land Trust there are real benefits aside from knowing that you are making the amazing gift of preserved affordable housing to the community. Owners who donate their property outright (or some of the equity from their home) are typically entitled to an income tax deduction based on the property’s fair market value. In addition, donors avoid paying capital gains tax owed if they were to sell the property.
Donate In the Future:
Owner leaves property to CSCLT in Will, Living Trust, or Beneficiary Designation.
Many owners consider their estate plan the best place to set up a gift to the Community Land Trust so that their property can be used for affordable housing after they pass. Donating assets through your Will or Living Trust or by designating the Community Land Trust as beneficiary of your retirement account or life insurance allows you and/or your heirs to avoid paying estate and/or income taxes on those assets. While the impact is less immediate, this kind of planning for the future is essential to the Land Trust’s long-term goal of removing as many properties as possible from the private, speculative market.
Sell Your Home at a Discount (Bargain Sale) :
Owner sells the property to CSCLT at a below market rate price, either now or in the future and gets a charitable deduction from their income tax for the difference between market rate and the sales price.
If you don’t want to contribute to the speculative real estate market but need to get some return on your property and could use an income tax deduction, selling your home or the remainder interest in your home to a CLT at below market may make sense for you.
Donate Your House Today, But Stay as Long as You Want!:
This is called the Retained Life Estate (RLE) option. Owner sells the “remainder interest” to the Land Trust, but continues to own the “retained life estate” and continues to live there for an agreed upon period of time, which could be for the rest of the owner’s life. The Land Trust pays the owner the value of the remainder interest, determined by an appraisal of the “fair market value” and an IRS formula for the value of the RLE. If you agree to transfer the property at a price below fair market value, you can get a tax deduction for the difference.
RLE is a good option for homeowners who want to continue to live in their house for either the short- or long-term, and need some cash in the meantime. This option can be better than a “reverse mortgage” — which is laden with fees and can result in transfer of your home to a bank or mortgage lender rather than your CLT.
Donate Cash or Securities:
Donor donates cash or securities to CSCLT to fund future acquisitions of real property.
Donations of cash or securities (i.e., stock or mutual fund shares) are a powerful way to help the Land Trust fulfill our mission. With this gift the Land Trust will be in a better position to purchase properties that become available, thereby removing those properties from the speculative real estate market.
Matching charitable contributions by employers and donations from business entities will help make affordable housing a reality for the workers who support our economy.
Do you want to contribute to providing affordable housing for Sonoma County’s workforce? CSCLT continues to look for corporate donors who can contribute grants, materials and items to help build, furnish and landscape new affordable homes.
Sample Language for Wills or Trusts
“I, _____________ (your name) , give the real property commonly known as and located at _________________ (property address), described on the deed as ___________ (exact description of the property as it reads on the deed), to CommonSpace Community Land Trust for the benefit of CommonSpace Community Land Trust, to further the purposes and objectives of the Land Trust in providing affordable housing to low-income Sonoma County residents.”
Again, CSCLT STRONGLY encourages you to work with an attorney anytime you are making changes to, or creating, your estate plan. Should you decide to craft your own or are curious what the gifting language might look like…
Considerations When Evaluating What Type of Contribution to Make
- IMPACT ON YOUR FAMILY:
In addition to speaking with an attorney and a tax preparer, owners considering these gifts should also talk to their children or heirs so that the family will be on board with the ultimate disposition of that asset as a donated property or below market rate sale.
- LEGAL & TAX CONSEQUENCES:
Once you’ve made a decision what you want to do with your home – TALK TO YOUR ATTORNEY AND TAX PREPARER. It is vital that you talk to independent counsel who can help you make the best decision for you and your family.
- WHAT YOUR MORTGAGE ALLOWS:
If there is a mortgage on your property, you will need to contact the mortgage lender before you transfer the property ownership. If you have debt on the property, we need to help figure out how to best resolve that.
As you think about the different ways to give, and how can use your property, or other assets to help ease the affordable housing crisis – don’t forget to consider these points.