One of my favorite things about real estate is that it can be so much more than just buying and selling houses. Real estate also offers the opportunity to help individuals and families accomplish their charitable goals.
With a more than 20-year career in real estate here in Clark County, I’ve had the great privilege of working with many clients multiple times as they enter new stages of life and residence. For individuals who have reached the point where they are ready to make a larger charitable impact, I love working with them to help turn their real estate assets into a charitable legacy.
Many times, individuals who are very charitable already are surprised to find out how they can use real estate assets to support their favorite nonprofits. In many cases, they can even get Uncle Sam to help them make those assets go even further.
A charitable remainder trust (CRT) is a way for a property owner to transfer an asset like a home or a rental property into an irrevocable trust, which then sells the asset, reinvests the proceeds and pays you income out of those funds.
You should talk to your financial planner for the full range of benefits and technicalities on all of these topics, but from the real estate broker perspective, this is a great tool because it relieves you from the burden of property management and also removes the asset from your portfolio, so you may be able to take a tax deduction and also avoid capital gains tax. Your accountant can help with the specifics.
This is a great approach for those with modest incomes who want to make a meaningful impact, but don’t have liquid assets to do so at the level they desire. I’ve had so many wonderful conversations with clients who talk about their favorite charities and the good that they will be able to do by thinking of the sale of their home or rental property in this way.
Another approach is to liquidate an asset and use those proceeds for charity. If you simply sell your home and donate the proceeds, you lose many of the tax benefits of working directly with the charity. However, if you donate the asset to the charity, with the intention of having them sell it, there are many immediate benefits for both.
Over the last several months, I’ve had the honor of working with the Clark College Foundation and one of their donors, George Fullerton, on a liquidation project to help him make a sizeable gift to the foundation.
Fullerton, a longtime coach and teacher at Clark, earned a modest salary over the years but through targeted investment amassed a large number of rental properties. He approached Clark College about wanting to put the foundation in his will, and they helped him find a solution that would be more financially beneficial to him and to the foundation, and would also allow him to see the benefits of his donation right away.
Hal Abrams, vice president of development for the foundation, brought me in to sell some of Fullerton’s properties for the best price possible.
“By directing his assets to us, it benefitted him on his taxes and his kids as well because they will not have to pay an inheritance tax on those assets when he passes,” Abrams said.
Because Fullerton opted to donate now, he also had the opportunity to work closely with us on how the properties were marketed, and he gets to meet the students who are the beneficiaries of the scholarships he is funding.
“George is having the opportunity right now to see the fruits of his philanthropy,” Abrams said. “Through his gift, and working with a high-quality real estate broker, we have been able to maximize his contributions.”
The endowment fund set up in Fullerton’s name will fund about 20 scholarships, in perpetuity. Knowing that the homes you buy and sell can be used to make memories or to generate income is one level of satisfaction. Knowing that you can use those same assets to make a meaningful difference for nonprofit charities you love is another level entirely.
Heather DeFord is a broker and CLHMS with The Heather DeFord Group of Cascade Sotheby’s International Realty. For more info, visit www.TheHeatherDeFordGroup.com.
