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Give Your House To Your Alma Mater

This article is more than 6 years old.
 

Contemplating a gift of real estate to charity? Giving your house to charity is tricky but tax savvy. “You have to have donors willing to think about a very unusual type of charitable gift,” says Haverford College’s director of gift planning Steven Kavanaugh. And a charity willing and flexible to accept it. Here’s how Haverford reeled in three real estate gifts.

Dr. Emily Mudd's house (above) turned into $340,000 for Haverford College's endowment. 

The life estate. Dr. Emily Mudd, a pioneering family and marriage counselor at the University of Pennsylvania who enjoyed walks at Haverford’s arboretum, gave her Millbrook Lane house to Haverford but kept a “life estate,” allowing her to live there for the rest of her life, and entitling her to a charitable income tax deduction for the value of Haverford’s “remainder interest” in the house. After her death at age 99, Haverford sold the house for $340,000, with the proceeds going to the school’s endowment.

Richard Hyke's home (above) turned into faculty housing for Haverford College and lifetime payouts for him.

The charitable gift annuity. Another friend of Haverford, a retired Drexel University economics professor Richard Hykes, walked across the street from his home on College Avenue to enjoy community events at Haverford. He rented out rooms in his house to students, but wanted to be a renter himself, not a landlord, in his old age. So he gave his house to Haverford in exchange for a charitable gift annuity, which pays Hykes $34,000 a year. Haverford rehabbed the house into a duplex for two faculty families. Note: in some states, charities aren’t allowed to use real estate to fund charitable gift annuities.

The simplest type of real estate gift is just handing it over outright, whether it’s a house or raw land.

The outright gift. A Haverford alum who owned a large farm in Westchester County, New York was downsizing, and he and his wife split off a 50-acre parcel of raw land to give to Haverford, and sold the rest of the property. The school turned around and sold its parcel, putting $750,000 in its endowment. The tax angle is just like if you’re giving appreciated stock: you don’t pay capital gains tax on any appreciation. And you get a charitable tax deduction for the fair market value of the gift. A nice deal for the donor and the charity.

For how collectibles magnate Ted Stanley made pre-arrangements for his historic house to fund his philanthropy, see Home Sweet Charitable Gift: A Frank Lloyd Wright House.