Using Your Home As A Gift

Give Property While Continuing to Enjoy Its Use

The most valuable single asset many persons own is their home. Have you ever considered using your home to fulfill the desire to make a charitable gift? Did you know there is a way to give your house while continuing to live there as always?

Using what is known as a life estate arrangement, you make a gift of your home or other appropriate property now while retaining the security of knowing you may live there as long as you wish. You enjoy the full rights and responsibilities of ownership.

Because you will make a gift of the property at your death, you receive a charitable income tax deduction for part of the value of the property immediately.

You continue to maintain the property, pay the taxes, and even receive any income it generates. But because you have provided for the future disposition of the property during your lifetime, it does not pass through your probate estate at death, possibly saving unnecessary expenses and avoiding delays. The property will also not be part of your estate for federal tax purposes, resulting in what may be significant tax savings for your heirs.

Note that you should not consider giving to remainder interest in your home to any charitable organization if it represents the bulk of your estate and if you may need access to its full value to fund a possible future move to a retirement community, etc.

For example: Marjorie, 77, lives in the family home that she and her late husband purchased many years ago. She has no children but has two sisters who live out of state. Marjorie plans to leave the majority of her estate to her sisters and their children, but she would like to make a substantial charitable gift in memory of her husband.

After reviewing all of her assets, Marjorie decides to make a gift of the home now, retaining the right to live there for the rest of her life. She has been advised that she has plenty of other assets should she one day need costly long-term care.

In so doing, she gains the satisfaction of knowing she has made a meaningful gift while also enjoying an immediate income tax deduction equal to more than half the value of the home, as well as the knowledge that she has removed the home from her estate for tax purposes.