Tax Benefits of a Gift of Real Estate

If you hold an asset such as real estate that has appreciated in value, it can be an excellent vehicle for making a gift because you will receive a two-fold tax benefit.

If you sell the appreciated asset, you will become liable for a capital gains tax on the difference between what you paid for the asset and its current value, even if you donate the proceeds.

By transferring the property to Norwich University, you are no longer subject to a capital gains tax (approximately 15 percent of the appreciated value). The transfer also reduces the amount of taxable property in your estate, which can ultimately lessen your estate tax liability.

Only real estate held for more than one year should be considered for transfer in order for the donor to receive the maximum benefit. The fair market value of this gift is deductible in a given tax year up to 30% of a donor’s adjusted gross income, or up to 50% of a donor’s adjusted gross income if the cost basis of the asset is used instead of the fair market value. The 50% election may be most advisable when a donor has unusually high income.

Please contact Priscilla Gilbert, Director of Planned Giving, for more information at 802.485.2301 or email pgilbert@norwich.edu.