What types of real estate are appropriate for charitable giving?
The choices are as varied as your personal circumstances.  Common possibilities include:

• House or condominium
• Apartment building
• Farmland, timberland or undeveloped land
• Vacation home
• Commercial building
• LLC or limited partnership interest

Why should I give through the Charitable Real Estate Foundation (CREF) rather than directly to my favorite charity?
Because of liability and other issues, often related to staff and asset size, not every nonprofit organization has the capacity to handle a gift of real estate.  CREF can make your gift happen quickly and inexpensively, realizing the maximum value for the donor as well as the charity of choice. Plus you can divide the proceeds of a single gift of property among multiple charities or use the Community Foundation to design a custom charitable giving program for your family.

What type of gift is best? 
Consider the following options:

Outright gift. You avoid all capital gains tax and get a charitable deduction of the fair market value of the property contributed.  That deduction is up to 30 percent of the donor’s adjusted gross income in one year and carried forward if necessary as a charitable deduction over the next 5 years.

Gift with a retained life estate. You retain the right to live in or use the property for the remainder of your lifetime, but gain an immediate income tax deduction for the gift. We can calculate this deduction, which depends on the value of the property, age of donor and current interest rates. At death, CREF can sell the property without going through the delay or expense of probate, making the proceeds available quickly to benefit one or more charities.

Gifts providing income. If you need income for life or a certain number of years, you can make your gift to a Charitable Remainder Trust (CRT). This provides an immediate income stream, as well as a tax deduction based on the value of the remainder interest for charity.  Ask your professional advisor which option is right for you.

Gift of LLC or limited partnership interest.  A gift is still possible, even if you hold your real estate asset through shares in limited partnerships or LLCs.  CREF experts review the underlying documents and asset holdings of each proposed gift to determine the value and benefit of your gift.

Gift through will or trust.  Simply designate the real estate asset as a bequest through your will or living trust.  This qualifies for an unlimited estate tax deduction. CREF will evaluate any property received through such a gift before acceptance, so it’s a good idea to call today if you plan such a future gift.

Bargain sale. This term refers to what happens when you receive cash or other consideration for only a portion of the fair market value of property that you give to CREF. You bypass capital gain and receive a tax deduction for the amount of the fair market value that is over the value returned to you. You will recognize a taxable gain on the value you receive.

Private foundation alternative. Any gift of appreciated, long-term capital gain property such as real estate to a private foundation is valued for tax purposes at the basis that the donor has in the property, rather than fair market value. If you use CREF to make such a gift to an advised fund or supporting foundation of The Community Foundation, the property is valued at fair market value and you can gain maximum tax benefits. Plus you have continued family involvement in philanthropy for future generations.

How do I know if I can use my real estate asset for a charitable gift?
Our staff will find the answers to your questions or consult with your professional advisor.  Members of the CREF Board will review each potential gift of real estate and evaluate its suitability based on set policies and standards. Through their expertise, itself a gift to the community, these real estate professionals will streamline the process of making each gift, reduce the costs related to the transaction, avoid undue complications and risks for the receiving charity and maximize the value of the gift upon sale. In addition, click here for more details about issues such as appraisals, transactional costs and required documents.

Should I give today or through my estate?
The choice of assets and timing in real estate giving should be based on the same decision-making process as any gift to charity.  Talk with your professional advisor or perhaps with family members about any concerns you have.

An immediate gift of real estate may provide a tax deduction that makes a big difference today, even if you retain the use of the property during your lifetime. You can convert real estate into a stream of income for the rest of your life by establishing a Charitable Remainder Trust or Charitable Gift Annuity, transforming a low-yield asset into a higher-yield, income-producing asset and claim a tax deduction for the charitable portion of the gift.

Or you can make a planned gift, setting the parameters of the gift in your will and knowing that the Charitable Real Estate Foundation will make it possible for your charitable wishes to come true.

What is the role of the Community Foundation in the Charitable Real Estate Foundation?
As the state’s largest community foundation, this public charity has both knowledge and experience in accepting gifts of real estate.  We’ve seen how donors of modest and magnificent means have used this asset to fulfill their charitable interests and receive financial and tax benefits.

That makes this partnership with real estate professionals a perfect match.  The volunteer CREF board can focus on the real estate transaction, making such gifts more easily available to all charities and increasing the overall level of giving real estate in the community. 

By creating CREF, The Community Foundation continues to follow its mission of connecting people to make life better in greater Birmingham – in this case by helping donors to unearth the charitable asset of real estate.

What fees and costs are associated with a gift through the Charitable Real Estate Foundation?
1.5 percent of the proceeds from the sale of the property is assessed toward the operating and administrative cots of accepting the gift, including staff services.  The minimum acceptance fee, no matter the amount of the gift, is $5,000. 

The donor also is responsible for the payment of all costs associated with the transfer of gifted real estate such as legal fees, insurance, appraisals or environmental assessments.  Expenses will vary depending on the gift, but should be equivalent to normal transaction fees of selling property on the open market.  
 
All income and expenses incurred by the CREF directly associated with the retention, management, and sale of donated real property also will be accounted for with the proceeds of the sale.  Such income and expenses may include but are not limited to: rental income, title search, insurance, security, environmental clean-up, real estate taxes, maintenance needed to sell or maintain the property, debt service, and real estate commission for the sale of the property.