If you own property that is fully paid off and has appreciated in value, you can deduct the fair market value of your gift, avoid all capital gains taxes and remove that asset from your taxable estate.
The UW considers accepting all forms of real property. These include residential, commercial and industrial properties, undeveloped land and ownership interests (e.g. limited partnerships). We have an established track record of evaluating a variety of income-producing properties, including apartment, retail and office buildings.
Property can be given outright. It can be contributed to a charitable remainder unitrust, or take the form of a retained life estate contribution.
In the case of an outright gift, the UW generally sells the property. That way, the proceeds can support the program or fund of your choice. If you make a gift of real property to a charitable remainder unitrust, the property is sold and the proceeds are reinvested in a portfolio of securities to produce income for you or someone you care about. With a retained life estate in a personal residence, vacation home or farm, you contribute the property to the UW — but the gift is treated as your property for life.
Contributing appreciated property to the UW provides significant tax benefits. If the property is donated outright, you can typically deduct the full fair market value of the gift up to 30 percent of your adjusted gross income in the year of the gift, with an additional five-year “carry-forward” for any unused deduction.
With a unitrust or retained life estate gift, the tax deduction equals the remainder value of the property (which is less than the fair market value).
Substantiating deductions for property gifts
To give property to the UW, you’ll need to obtain a qualified appraisal at your own expense in order to claim a tax deduction. The appraisal should be dated no earlier than 60 days before the gift, and no later than the due date (excluding extensions) of your federal income tax return for the year in which the gift was made — e.g., if you make a gift by Dec. 31, then April 15 (or the extended due date) of the following calendar year.
Due diligence for real property gifts
With all gifts of real estate, the UW Real Estate Office performs a due diligence evaluation of the property to determine its acceptability. This evaluation has two purposes: to ensure a meaningful gift will result, and to ensure that the university and the donor share an understanding about what will happen with the property.
First, the Real Estate Office obtains a preliminary title report. It assesses the marketability of the property. This assessment includes an evaluation of the property’s status with respect to outstanding mortgages, liens and presence of hazardous substances. If hazardous substances or dangerous conditions are discovered, the university and the donor will discuss what action the donor can take to bring the property to a condition that is acceptable for transfer to the UW.
What happens to my property after the gift?
Usually, the UW will try to sell the property as soon as possible to fund your chosen purpose.
There are times when the UW doesn’t sell donated property. The most common examples are properties that the UW wishes to use for academic research or administration purposes. The UW’s decision to retain ownership of a property is heavily influenced by the perceived value of the property to the university, the donor’s gift purpose, current market conditions and the anticipated carrying costs. The UW treats all potential real property gifts individually. We strive to hold full and open discussions with donors to ensure the very best outcome for both the donor and the University of Washington.