Selling Income Property + Charitable Passion = Zero Tax Sale

Donors and the Community Foundation find all sorts of ways to work together to increase philanthropy and build charitable impact in our region. Charitable goals and passion for a cause motivates people to look into their assets to find something they can turn in to charitable dollars. The Community Foundation works hard to make the most of their gifts. 

One example of a type of gift that has helped our donors is called the “Zero Tax Sale.”  In this scenario, a donor has an income property they wish to sell. Typically, it has a low basis so it will be subject to capital gains tax. We do a calculation based on the donor’s personal tax situation and on the estimated sale value and basis of the property. That calculation tells us how much of the property the donor needs to “gift” to the Community Foundation to exactly offset the taxes they would pay. The donor gifts that percentage of the property and the Community Foundation lists it for sale. When the property sells, the contributed portion goes into a charitable fund for the donor’s use, and the remaining portion goes into their pocket.

We invest our charitable assets, and even amid times of economic turmoil, our five-year investment return has averaged slightly better than 5%. The donor not only has the gift sale proceeds in a charitable fund, but that fund is growing, so the donor even has more to give away. I sometimes describe this arrangement as, “Costing the donor 60 cents to have a dollar to give away.” It is a generalization, but the donors who have gifted through this mechanism are happy with the results. Depending on the donor's wishes, we could even create an arrangement to have the proceeds go into a charitable income instrument that pays income to the donor or to family members they designate.

The Community Foundation is a trusted resource with expertise at accepting appreciated property and unusual gifts to benefit our region. Over the years, we’ve received multiple properties in California for transplanted residents, commercial property and land in five states, an operating company and a long-term lease on a grocery store in Memphis. Local donors have contributed a rare Testore violin, lumber property in Oregon, and fractional interests in dozens of properties in Washoe, Churchill, Lyon, and Storey counties. Each of these “unusual” gifts is received with gratitude for the donor’s generous spirit and the gift's concrete charitable benefit in our region. We are honored to be a trusted partner with donors and their professional advisors.

Everybody’s situation is different. The variety of charitable gift plans that benefit donors and their community is exciting, and one might be just the ticket to help you reach your charitable goals. Are you curious about how you can make a charitable gift with little or no tax, or that can generate income, or come from your IRA distribution? Give us a call, and we can run the numbers.

If you'd like more information, call our team at (775) 333-5499 or email us here.

The Community Foundation of Northern Nevada is strengthening our community through philanthropy and leadership by connecting people who care with causes that matter.

Nov. 13, 2021