Building a Legacy with Habitat
As property values increase, so does the cost of doing business as the number one builder of affordable housing in Moore County. As our population grows, so does our need for a robust workforce to work in our service industries, hospitals, and schools. Without affordable housing, attracting talent to help grow our businesses is hard. Habitat is determined to acquire enough land to secure the next 15 years of building 15 houses a year. With your help, we can create safe, energy-efficient homes for families partners who perform 300 hours of required "Sweat Equity" and pay a guaranteed affordable mortgage.
How Can You Benefit from donating or selling your land to Habitat?
Suppose you contribute undeveloped land to Sandhills Habitat. In that case, you may potentially eliminate capital gains tax on the appreciation and be entitled to a fair market value tax deduction for the donation.
The IRS requires a qualified appraisal to establish the fair market value of property to take an income tax deduction on your taxes. Sale of your 100% interest in the property will totally avoid any capital gains taxes. If you decide to gift a portion to Habitat but sell a portion for cash the the capital gains taxes are prorated based on the amount of your gift. See Bargain Sale.
A bargain sale is a strategy where you transfer a percentage portion of your land to Habitat in return for an immediate cash payment. It is a gift strategy where you transfer of land less than the property fair market value. This strategy reduces the tax liability of the donating your property. You receive an immediate charitable deduction for the gift portion. You receive a cash payment for the balance. The capital gains on the gift portion is not taxed and the charitable deduction on the cash portion reduces the taxes on the sale portion. If appropriate your cash payments maybe made in installments.
A charitable gift annuity (CGA) is America’s most popular life income agreement. One strategy to consider is transferring your property (in whole or in part) and receive a fixed, guaranteed lifetime income for one or two lives. In addition to the income property transfers generate a current income tax charitable deduction which will reduce current and/or future taxes. Part of the payments you will receive will be taxed as ordinary income, part taxed as capital gains and part tax-free. Habitat receives the property immediately to construct affordable housing which you receive lifetime payments. Truly a win-win strategy for the right property.
Another strategy to increase your income and decrease your taxes with a land gift involves transferring the property to a Charitable Remainder Trust (CRT) agreement. A CRT is an individual trust designed to fit into your financial needs and objectives. Your property (in whole or in part) is transferred to the trust and sold to Habitat at a mutually agreeable price. The proceeds are invested to produce lifetime payments or for a term of years you select. One of the major advantages of a charitable trust is upon the sale of the property there are NO capital gains taxes. You select the payment rate (minimum 5%) you wish to receive. There is an initial income tax charitable deduction calculated on the life or lives who receive the income payments.
Habitat provides a consultant to work with you, your advisors and real estate broker who can show you the benefits of a property gift. This confidential services is provided at no cost and there is no obligation to proceed. Habitat is committed to providing as much insight as we can so any gift in any amount meets your personal and financial needs and objectives. A first step would be to review the Real Property Gift Form and discuss it with our staff.
Please tell us more about your land offer.