Real Estate can be contributed to SABA by title transfer or through a bargain sale transaction. Real estate can also be used to fund a charitable trust. Direct transfer of real estate to SABA or a charitable trust obviates payment of capital gains tax. Income tax benefits may be claimed over a five-year period.
Example: Dr. Evans uses the farm he inherited as the means of funding a charitable trust. The trustee sells the farm at fair market value generating a trust principal of $300,000. In twenty years or less, the trust's assets will revert to SABA. In the meantime, Dr. Evans anticipates a modest income supplement equal to 5% of the trust's annual valuation or approximately $15,000 per annum. Through the charitable trust, Dr. Evans is able to convert a static asset into a source of disposable income. Dr. Evans may claim a significant charitable deduction for that percentage of the trust assets that represent SABA's interest.
Example: Dr. Ryan would like to divest real property worth $75,000 and make a significant contribution to SABA. He offers to sell the property to SABA for 20% of its fair market value. Assured that Dr. Ryan's proposed gift is a marketable property with good title and free of environmental hazard, SABA agrees to pay Dr. Ryan $15,000. Dr. Ryan must pay capital gains tax on a portion of the cash proceeds of the sale but he may claim a charitable deduction of $60,000 for the difference between the sale price and market value.
Back to Legacy Planned Giving Program