Real estate gifts
OFB outlines steps for giving gifts of real estate
Real estate gifts include:
- personal residences
- rental properties
- office buildings
- land-leasehold interests
- other structures
Real estate gifts may be outright gifts, bargain sales (sale to a charity for less than full market value) or part of charitable life-income plans.
Because real estate can be difficult to sell and costly to maintain until it is sold, Oregon Food Bank scrutinizes all proposed real-estate gifts before accepting them.
OFB's Planned Giving Committee reviews each proposed gift and makes a recommendation to the Board of Directors. But the board makes the final decision regarding all property transactions.
Here are the steps we normally take with property transactions. Because of the unique nature of real estate, the steps vary with particular properties.
Property information
OFB staff will meet with you to assemble a profile of the property. We may engage outside professionals to help in this process.
Preliminary title report
OFB will obtain a preliminary title report to check the status of the title and to determine ownership.
Site examination
An OFB staff person or designated representative will inspect each potential property gift. We do this to find out if there are any obvious, unacceptable financial, legal, marketing or public relations risks associated with the property. A site inspection also enables OFB staff to appreciate the qualities of the property.
Gift proposal
If the property appears suitable for a charitable gift, OFB staff will prepare a written proposal. The proposal will include the tax consequences of the gift. It will state assumptions about the donor and the property and how the donor will transfer the property to OFB.
Please review the proposal with your legal and financial advisers before proceeding.
Board of Directors acceptance
OFB’s Planned Giving Committee serves as the gift-review body. It makes recommendations to the OFB Board of Directors regarding all property transactions. The committee may consider factors such as marketability, carrying costs, potential environmental liability and ultimate benefit to OFB.
Appraisal
Donors are responsible for establishing the value of the gift for tax purposes. Property gifts require an independent appraisal (see below). Report gifts of property to the IRS on Form 8283. Attach the form to your income-tax return.
The IRS requires a "qualified appraisal" for property valued over $5,000. We can provide a list of qualified appraisers. But donors are responsible for paying for the appraisal and making sure it's completed. The IRS prohibits the charitable gift recipient from getting involved in the property’s valuation.
Document preparation
OFB may prepare documents for review necessary to transfer the property. Documents may include deed of transfer, title insurance, life-estate agreement, etc.
If your gift involves a trust, the Oregon Community Foundation may serve as trustee. OCF staff and counsel may prepare a draft of the trust documents for your counsel to review. The donor normally bears the costs of preparing the actual trust documents because of the legal nature of the documents and the importance of protecting the interests of the donor.
Gift acknowledgement
OFB will send you a thank-you letter after completion of the transfer of the gift. The letter acknowledges receipt of the donation as of the date you transferred the title to OFB.
Expenses and proceeds
Prior to the disposition of the property, OFB may fund expenses related to the sale through its unrestricted funds (subject to administrative policies governing the OFB budget). We will reimburse OFB's unrestricted funds with proceeds from the sale of the property.
If we anticipate unusual carrying costs, we may ask the donor to cover those expenses.
Disposition
Unless restricted by the donor (for example, if the property is intended to fund a life-income gift), the Board of Directors reviews each outright gift of property. The board then decides disposition of the gift on a case by case basis and according to OFB’s strategic plan.
The donor may help locate a buyer for the property. But the donor may not—under any circumstances—establish a marketing or sales agreement with any agent or principal. The buyer may not have a signed sales agreement on the property. To do so would jeopardize the donor’s tax deduction.
Charitable gift annuities
Oregon Food Bank may accept real estate to fund a charitable gift annuity. Gift annuities funded with real estate require special planning, because—until the property is sold—funds aren't available to make annuity payments. We usually recommend deferring payments for a year or two to allow time for OFB to sell the property. Deferral of payment results in a higher rate after the deferral period.
Charitable remainder trusts
For real estate valued at $100,000 or more, a charitable remainder unitrust is usually the best choice for a life-income gift. This can be structured to allow time for the trustee to sell the property before income payments begin. Once the payments begin, the trustee can adjust the investments to accommodate your income needs and tax planning
It can take three to four months for full property evaluation and board review of the proposed gift arrangement. If you want to plan a gift of real estate during the current year for income-tax purposes, we recommend that you contact us and start the process no later than August.
For more information, call Gina Taylor, 503-419-4193
or e-mail gtaylor@oregonfoodbank.org.
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