Types of real estate gifts

Bargain sale

University Realty closed on a vacant warehouse property that needed extensive repairs and had been on the market for more than a year for $3.5 million. After receiving only low-ball offers, the broker approached University Realty about acquiring the property. After receiving the letter of intent through the broker, the property owner consulted his tax professional and realized the significant benefits of a bargain sale. University Realty closed in less than 21 days for $2 million cash, with the property owner receiving the balance of the $3.25 million appraisal as a tax deduction to offset future income for the next five years. Not only did the broker receive a commission on the sale of the property to the University Realty, the broker that brought that property also received the listing to lease the property, realizing two commissionable events.

University Realty closed on a multi-tenant office and retail property in Tempe, adjacent to the ASU campus that was a bargain sale. The owner was looking to sell the property, which had several tenants in various lease stages at the time of the transaction. The property had not actually been on the market, but the owner preferred to take advantage of selling to University Realty and making a gift to the Foundation at the same time. University Realty closed on the deal within 30 days for just under $7 million with the property owner receiving just under $6 million in cash, and the balance of $1 million as a tax deduction to offset future income generated.

Karen and Tom own a second home in the cool pines of Flagstaff, Arizona, for which they paid $80,000. It was recently appraised at $250,000. They are planning to retire in the Midwest to be closer to their children and grandchildren and would prefer to recover their original purchase price, but are anxious to sell the property as soon as possible to spend the Christmas holidays with their family. Knowing how swiftly the ASU Foundation can transact the purchase of a home, their real estate broker suggested they sell the property to the ASU Foundation for $80,000 to recoup what they originally paid for the property. Karen and Tom claim a charitable income tax deduction for $170,000, an amount equal to the difference between the fair market value of their house property on the date of their gift and what the ASU Foundation paid for the property.

Outright gift

A recent donor was looking to monetize her rental condominium without the stress of the selling process. In search of a simpler method, she turned to the ASU Foundation for assistance and developed a plan to donated her rental condominium. The ASU Foundation updated and sold the property within three months, not only bringing her relief and financial ease but enabling her to make a charitable gift that supports future generations of ASU students.

Charitable remainder unitrust

Susan, 60, is not an ASU graduate but has enjoyed the arts at ASU Gammage for decades. She wants to make a gift to the ASU Foundation to help ASU Gammage. Susan inherited a warehouse building from her parents a decade ago and the maintenance and upkeep of the warehouse has been time intensive and a cost burden. Her real estate broker had been unsuccessful in trying to sell the warehouse for years. She is now planning her retirement strategy and no longer wants to have to manage this warehouse and worry about keeping it leased. Her broker suggests she work with the ASU Foundation to transfer her warehouse into a 6% charitable remainder unitrust with annual lifetime payments to her. The value of the property is $250,000. Subsequent to the sale of the warehouse, Susan begins to receive quarterly payments based on the net proceeds of the sale. In addition to the recurring income she receives, she is eligible for a federal income tax charitable deduction of $81,305 in the year she creates and funds the trust. This deduction saves Susan $22,765 in her 28 percent tax bracket. Now, without the responsibilities of real estate ownership, each time Susan attends an event at ASU Gammage, she takes pride in knowing she had a part in Gammage’s continued legacy.

Retained life estate

Joe, 72, bought his house for $100,000 a few decades ago and has since paid off the mortgage. The house is now worth $600,000. Joe decides to transfer his home ownership to the ASU Foundation, while retaining the right to live there, rent free, for the rest of his lifetime. Joe is entitled to an income tax deduction for a portion of the value of the home in the year he transfers title to the ASU Foundation and creates a low-cost living option for her retirement years.

Will or living trust 

In addition to running a successful architectural practice, Mitchell, an ASU design school and architectural studies alumnus, owns and manages a commercial office property in downtown Phoenix. Mitchell has three grown children that he does not want to burden with the long-term management of this property. He has other assets that he plans to leave to his children. Instead, he has bequeathed the office building property to the ASU Foundation through his living trust. At the time of his death, the property will be transferred to the ASU Foundation. The net proceeds from the sale of the property or the net income from leasing the property will be used to fund an endowment at the Herberger Institute for Design and the Arts, as Mitchell directed.