Client who wants to donate real prop to charity when he dies, what are reasons why he should sell now instead?

I have a client who wants go give his property when he dies to a charity. I suggested he sell it and 1031 into a triple net to make more $ for the charity, however he doesn't feel comfortable with triple nets. Does anyone know how it would be more beneficial to him to sell it now and have the $ go to the charity now instead? He says he doesn't need more $, but doesn't want to pay the taxes on the gain.
In Selling Property - Asked by Mar R. - Feb 7, 2012
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Answer(s)

Margarita F.
Broker/Agent
Brooklyn, NY

I can tell you why he should donate his building for charity. I am working with people with neurological disorders My husband has MS and Parkinson's. A building to coordinate all efforts of different groups dealing with the disease would be just the perfect start. Just imagine, a perfect area for exercising, dancing, therapy, a room for conferences, and a room for art, where they can work their right side of the brain (that is where I come)
Professors and students could come to study them, research and volunteer. Now everything is scattered. The best neurological therapsits who specializes in MS (only two in the USA) works in an office that is a hole in a wall in the most congested area of NYC, where not even handicap plates cars are allowed to park. 30 minutes to go around the block. You get the idea. The dance goes in another county, as well as the singing. The art is gone. now where to have it. The best machines scattered. It has to be pulled together.
So you client, can sell his building make a killing of profit, you get your share and he can buy another building in NYC for neurological disorders. Unless you live with someone who has it you cannot imagine what it is. I wish he had cancer instead.

Feb 8, 2012
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Tracy Lee S.
Broker/Agent
Humble, TX

So he can be in real control of the process.

Feb 8, 2012
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Andy J.
Las Vegas, NV

Real Estate Tax Attorney here. Your client wants to donate real prop to charity when he dies, there are no reasons for him to sell it now. Give it to the charity upon his death. Why your idea of a 1031 exchange. The costs of that transaction [brokerage, legal, possible financing costs are pointless and unnecessarily expensive] The value of the intended gift will be diluted without any reason I can concept. 1031 would not be used here unless there is some other reason to change the nature of the underlying realty. All that will happen with a 1031 to perhaps NNN setup is that there will be less for the charity and more for those the effect the 1031.. He pays no tax. They pay no taxes, even if they sell it when they receive it. They are non taxed and they obtain a new "value at date of death" basis in the property
I have a client who wants go give his property when he dies to a charity. I suggested he sell it and 1031 into a triple net TO MAKE MORE FOR THE CHARITY, however he doesn't feel comfortable with triple nets.
How does the 1031 make more for the charity. Income and value would only be decreased after the 1031. The charity will know what to do best with their bequest. Your Donor could make requests as to its use, but I am unclear as to the motivations to change the character of the original property. Does anyone know how it would be more beneficial to him to sell it now and WAIT, DID YOU WANT THE GIFT TO BE MADE NOW?? He says he doesn't need more $, but doesn't want to pay the taxes on the gain. THEN JUST MAKE AN "INTER VIVOS" GIFT OF THE PROPERTY. NO TAXES FOR ANYONE. WAIT, EXCEPT YOUR DONOR GETS TO DEDUCT, AS A CHARITABLE DEDUCTION, THE FULL CURRENT VALUE OF THE PROPERTY REGARDLESS OF HIS BASIS. THIS IS 1ST YEAR TAX LAW STUFF. THIS IS THE BEST KNOWN WAY OF DERIVING A LIFETIME DEDUCTION OF A PIECE OF PROPERTY [ART, REAL ESTATE, ANYTHING -- STOCK, BONDS -- ANTIQUES] AT THE VALUE OF THE THING AT THE TIME OF THE GIFT.
In conclusion, do not sell -- capital gains tax, do not 1031 -- diminishes value of gift, and donate now and deduct the full value of the gift when given regardless of the previous donor basis. Get a tax attorney. Good Luck.
"he doesn't need more $, but doesn't want to pay the taxes on the gain." PERFECT
Tell him that you can get him a nice big deduction to reduce any income taxes he would otherwise have to pay in the future.

Feb 9, 2012
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Ronald P.
Saratoga Springs, NY

What kind of property is your client considering as a donation candidate. I packaged about 1M Sq. Ft. of charitable in two large transactions last year. There could be a lot of benefits for your client. Give me a call 518-584-5624

Feb 9, 2012
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Gary T.
Owner/Investor
Albany, CA

Did you look at donating the life estate? You need specialized appraiser and attorney for this type of donation.

Feb 9, 2012
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shelia b.
Houston, TX

Hats off to this gentleman who puts charirty above mioney. As co-founder and supporter of a non-profit organization my late daughter started. I have been te primary funder for over 30 years . To have property donated for worthy cause woyuld provide a means of revenue if the receipent has a plan of action. I have had a master plan for years but not enough cash flow to buy or lease .Our mission and .goal is to provide both a mobile and land retreat since the inner city oi Houston no longer has a major recreational park for youth. It has become a nursing home and even the seniors are bored.

Feb 10, 2012
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shelia b.
Houston, TX

Hats off to this gentleman who puts charirty above mioney. As co-founder and supporter of a non-profit organization my late daughter started. I have been te primary funder for over 30 years . To have property donated for worthy cause woyuld provide a means of revenue if the receipent has a plan of action. I have had a master plan for years but not enough cash flow to buy or lease .Our mission and .goal is to provide both a mobile and land retreat since the inner city oi Houston no longer has a major recreational park for youth. It has become a nursing home and even the seniors are bored.

Feb 10, 2012
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Jeff B.
Broker/Agent
Nipomo, CA

This is a case of doing what is best for your client even though you may not receive a commission for the transaction. Get your client a good tax attorney to handle the donation. This should yield three benefits to your client: (i) receive a tax deduction now for the gift, even though it won't be fully transferred until his death; (ii) avoid taxes on capital gains; and (iii) benefit his favorite charity to the max. In the case of a gift of his primary residence, he may also continue living there for the remainder of his life. The benefit to you is a tremendously happy client who will be glad to give you positive recommendations to other potential clients for your ability to accomplish his goals.

Feb 17, 2012
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