Steps for Making a Gift of Real Estate
St Johns Housing Partnership welcomes gifts of real estate, including land or buildings. These gifts may provide significant benefits for the donor as well as for the St Johns Housing Partnership. Depending on the type of gift, a donor may enjoy tax savings, lifetime payments and freedom from carrying costs, once the real estate is sold.
Real estate gifts require more planning than gifts of cash or marketable securities. The
St Johns Housing Partnership will need some time to gather necessary information and to evaluate legal and financial issues before making a decision with respect to accepting a gift of real estate.
If the St Johns Housing Partnership does decide to accept a gift of real estate, donors should be aware that the sale of donated property requires patience and realistic pricing. Please review the following information with your tax and legal advisors.
TALK TO ST JOHNS HOUSING PARTNERSHIP REAL ESTATE DEPT
We will need to know the type of property you are thinking of donating as well as the
method of making the gift.
- An outright gift of your real estate.
- A gift of real estate wherein you retain certain interests, such as the right to live in
your home for the duration of your life, and give the remainder to the St Johns Housing Partnership.
The Real Estate Dept can give you further information about the tax and financial
benefits of these and other gift methods.
PROVIDE INFORMATION AND DOCUMENTS TO THE REAL ESTATE DEPARTMENT OF SJHP
Because legal restrictions may limit the ability of the St Johns Housing Partnership to own or sell a parcel of real estate, the St Johns Housing Partnership must review all relevant information before deciding whether to accept a gift of real estate. Information and documents required for review include:
1. Copy of the deed to the property.
2. Copy of any condominium agreements, restrictive covenants, leases and/or management
3. Copy of a current real estate appraisal by a qualified real estate appraiser. (See below)
4. Copy of any property tax statements and insurance policies.
5. A completed questionnaire (which we will provide to the donor) regarding environmental
6. Estimated or actual carrying costs for the real estate. These costs include property
taxes, insurance and maintenance, and depending on the type of property, this may
include utilities, grounds care, snow removal, caretaker fees and condominium fees.
In addition, the St Johns Housing Partnership will conduct a title search at the St Johns Housing Partnership’s expense.
OBTAIN A “QUALIFIED APPRAISAL”
The donor will need to obtain a “qualified appraisal,” as defined by the Internal Revenue
Service (IRS), and provide a copy to St Johns Housing Partnership for its review. The qualified appraisal is required by the IRS for the donor to substantiate the value of the gift and receive a charitable tax deduction.
For IRS filing requirements the qualified appraisal must be dated not more than sixty
days before the date of a gift. If more than sixty days elapse between the date of appraisal and
the date of gift, the donor will need to have the qualified appraisal updated for tax filing purposes.
The cost of the qualified appraisal is borne by the donor. In some cases this cost can
GIVE THE ST JOHNS HOUSING PARTNERSHIP TIME TO REVIEW AND ACCEPT THE GIFT
Once the St Johns Housing Partnership has all the necessary information, the St Johns Housing Partnership’s Committee for Gifts of Real Estate will conduct a due diligence review in order to decide whether to accept the gift. Typically, we will keep the donor informed about the timing and the process by phone and follow up with a confirmatory letter.
MAKE ARRANGEMENTS TO TRANSFER THE PROPERTY TO THE ST JOHNS HOUSING PARTNERSHIP
Once the proposed gift has been approved, the St Johns Housing Partnership’s Office of Real Estate Finance and the General Counsel will coordinate with the donor and the donor’s legal advisors to arrange the closing and transfer of title.
The donor’s legal advisors will prepare and record the deed and any related documents
because of their knowledge of local law and procedures. The St Johns Housing Partnership’s General Counsel will assist by providing draft language for the documents, particularly language with respect to retained life estates.
The date of gift is usually the date on which title to the property is transferred to the
St Johns Housing Partnership (except that in certain states the date of gift is the date the transfer is recorded).
CONSIDER CARRYING COSTS AND TRANSFER TAXES
Just as the donor is responsible for carrying costs prior to the gift, carrying costs (see
previous page) will generally continue to be the donor’s responsibility until the property is sold by the St Johns Housing Partnership.
If the donor retains a life estate in the property, the donor will be responsible for carrying
costs as long as the donor lives or until the donor releases the life estate.
Realty transfer taxes, assessed in many states and some local jurisdictions on the transfer of title, will be the donor’s responsibility as well.
UNDERSTAND IRS REPORTING REQUIREMENTS
The St Johns Housing Partnership cannot provide tax advice but can assist the donor’s tax advisors with the calculation of the donor’s charitable tax deduction. Please bear in mind that gifts of remainder interests will limit the donor’s deduction to a portion of the appraised value of the real estate.
The donor is responsible for substantiating his/her charitable tax deduction for the gift
of real estate by obtaining a qualified appraisal (described above). The appraisal is used to prepare IRS Form 8283, which the St Johns Housing Partnership will sign and the donor is required to file with his/her tax return for the year in which the deduction is claimed. The IRS may disallow a deduction if Form 8283 is not filed.
If the St Johns Housing Partnership sells donated property within three years of the gift date, the St Johns Housing Partnership must disclose the sale price by filing IRS Form 8282. In such an event, the St Johns Housing Partnership would send a copy of the completed Form 8282 to the donor.
Thank you for considering a gift of real estate to St Johns Housing Partnership.
If you have further questions, please call the St Johns Housing Partnership
at (904) 824-0902.