You can donate a personal residence or farm to Cancer League of Colorado Foundation and continue to occupy or use the property until death. This gift is called a Retained Life Estate, and requires a Deed accompanied by a Life Estate Agreement.
Such a gift can provide a current income tax deduction for the property’s current value, less the value of occupying the property for the balance of your life. The IRS provides a formula to compute the charitable deduction.
When considering such a gift, a few conditions apply:
- Property must be a personal residence or farm. A personal residence may be a primary residence, secondary residence or a vacation home. To be classified as a farm, the property must meet specific criteria under applicable state law.
- This gift is irrevocable. Consequently, a donor could not draw against the equity of this property in the future.
- The donor is responsible for the normal property maintenance costs, including any maintenance fees, property taxes, insurance, and repairs.
- A person can vacate and rent the property to generate income. Also, the donor could subsequently decide to donate the remaining portion of the life estate to Cancer League of Colorado Foundation, which may qualify for an additional income tax deduction.
- Cancer League of Colorado Foundation retains the right to sell the property upon completion of your life estate.
For more information, please contact us at firstname.lastname@example.org.
One Couple’s Legacy
Consider the example of Sam and Cathy.
In their mid-70s, Sam and Cathy are retired and enjoying their golden years, active in their community and traveling when schedules permit. They own their $500,000 home free and clear, having paid off their mortgage in the years before retirement. They plan to live in their home for the balance of their lives, health permitting. Sam and Cathy also face a significant income tax liability each year. Finally, they are considering a significant gift to Cancer League of Colorado Foundation.
After discussing options with their advisors and visiting with their children, Sam and Cathy elected to deed their home to the Foundation, while simultaneously preserving their right to live in their home for the balance of their lives. Only after the second person passes away will Cancer League of Colorado Foundation take full title to their home. Based upon their ages and other factors, Sam and Cathy receive a current income tax deduction of approximately $220,000. Their children are remembered in other parts of their estate plan.