The unitrust allows you to bypass capital gains taxes at the time of the sale on the portion held in the trust. While there may be some capital gains on the portion of the property you hold and sell, the charitable income tax deduction you receive from the unitrust can offset most or all the capital gains tax due.
Once the property sells, the trust can pay you and a loved one an income stream for life at a rate between 5 and 7 percent. The Texas A&M Foundation’s Office of Gift Planning staff can show you what your payments might look like. After a lifetime of payments to you, any remaining funds in the trust will be used to support an area of your choosing at Texas A&M.
When contemplating a donation of property to the Foundation, you’ll want to think about how much you used the property, how much it has appreciated over time, and what the tax consequences and costs would be should you sell rather than donate.
To gain the most from value from you gift, here are some properties to consider donating.
Highly Appreciated Properties
As communities expand, agricultural land surrounding it often soars in value. If you own highly appreciated agricultural land, you may hesitate to sell it considering the substantial capital gains taxes you would owe. Donating highly appreciated properties – such as agricultural land or homes in cities where property values have skyrocketed – can be a wise choice.
Investment Properties
Like many people you many have invested in residential rental properties or commercial properties to provide supplemental income. Over the years, property maintenance, finding renters, collecting rent and paying taxes on the properties may have become too much trouble. By placing these properties into a charitable remainder unitrust, you can receive the lifelong income stream you desire while avoiding the headaches of property ownership.
