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Outright Gift of Real Estate

Case Study

Frank and his wife Ruth have enjoyed their family vacation home in Maine since they bought it in the 1970s. It is where they spent many summer months when their two children were growing up. But now their children have moved to other parts of the country with their own families, and rarely are able to spend time in Maine. Frank and Ruth seldom use their Maine home themselves, preferring other travel options in the summer months, including visits to their Florida condominium.

The burdens of maintaining the property—repairs and maintenance, the likelihood that a new roof will be needed sometime in the next five years, increasing property tax and insurance bills—have caused Frank and Ruth to make the difficult decision that they need to part with their Maine home.

Since neither of the children wants to take over the property, and because both children will be well-provided for in other ways, Frank and Ruth considered donating their Maine home to Amherst on the occasion of Frank’s 50th reunion.

The College was delighted to learn of their interest in such a generous gift, and worked with them and their advisors over several months to complete the gift transaction. After the College’s due diligence investigations (including title search, environmental assessment, appraisal, marketability report) proved satisfactory, Frank and Ruth proceeded to deed over their home. They obtained a qualified appraisal estimating the value of the property at $550,000. They were therefore able to take a charitable tax deduction on their income taxes of $550,000, with the ability to roll over their deduction for an additional five years as necessary. They avoided the very large capital gains tax that would otherwise have been payable (their tax basis in the property was only about $150,000). And, they avoided the inconvenience of having to sell the property themselves. Best of all, they had the satisfaction of knowing they had made a leadership gift to Amherst during Frank's reunion year.

The College, upon taking title to the property, promptly listed it with a local realtor, who was able to help the College sell the property.

Summary of Benefits to the Donor(s)
  • Avoided capital gains tax of as much as $60,000
  • Generated a potential income tax deduction of $550,000, useable for over six years
  • Removed a $550,000 asset from their taxable estate
  • Avoided the burdens of managing and selling the property
Summary of Benefits to Amherst College
  • Net cash proceeds, available within 60 days of the gift, of about $515,000 (assuming 10% transaction and carrying costs for the College)

Information contained in this website should not be considered legal, accounting, or other professional advice. Individuals considering a planned gift to Amherst should consult with their financial advisor.
For more information about making a planned gift to Amherst, please contact the Gift Planning staff.

 

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annualfund@amherst.edu
Main Phone: (413) 542-5900
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Amherst College
P.O. Box 5000
Amherst, MA 01002-5000

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