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Lee, age 75, owned a beach community rental property with a fair market value of $800,000 subject to a $200,000 mortgage. Rental income was well below the market but she preferred a stable income rather than risking vacancies. Although she was retired from her academic career, Lee was responsible for property taxes, insurance and maintenance plus acting as the property manager. After the mortgage payments and overhead expenses were made, an income of only $800 per month remained.
Lee wished to increase her retirement supplement with higher payments. The burden of management and the property's small return on equity led her to set up a charitable gift with the AARP Foundation. She also wanted to help the AARP Foundation in its effort to improve the lives of the aging.
Lee decided to do a charitable gift annuity with the AARP Foundation in exchange for the real estate. She donated the asset in exchange for lifetime payments made by the AARP Foundation.
Real estate gifts have proven very challenging for most charities. The AARP Foundation anticipates the difficult issues with each transaction and has detailed policies and procedures in place to accommodate the donors. In addition to the policies they have interlocking teams of professional service providers to help complete every phase of the donation process.
She entered into a contract donation with the Foundation. A buyer was found and the donation was completed within six months of the initial contact with the Foundation.
Now Lee receives well over $3,000 per month with a portion of the income sheltered for six years by virtue of the charitable gift tax deduction that is carried forward. She says the best part of the transaction is that she can really retire now without the financial and emotional burden of property ownership!
Please note: The name and image above is representative of a typical donor and may or may not be an actual donor to our organization. Since your gift annuity benefits under federal rules may be different from this person, you may want to click here to view a color example of your gift annuity benefits based on your age.
You may print a gift annuity tri-fold brochure. Click Here.
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