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Real Estate 

Willamette University generally accepts gifts of residences, vacation homes, commercial buildings, farmland, timberland, and undeveloped property. In addition, two special gift opportunities are available in the following circumstances:

Bargain Sales

In some cases, you may wish to arrange a bargain sale of property. In a bargain sale, Willamette would pay you cash (less than the market value) for the property. You would be subject to capital gains tax only on a portion of the property's appreciation, and your income tax deduction would equal the difference between the price paid by Willamette and the value of the property. Often you can set the amount of Willamette's cash payment to avoid tax on the transaction.

Life Estates in Residences and Farms

A unique gift opportunity is available for personal residences, vacation homes, and farms. You can give the property to Willamette while retaining the exclusive right to use the property during your lifetime. You would receive a current income tax charitable deduction based on the present value of the University's future interest in the property.

Benefits of Real Estate Gifts

Double Tax Benefits

The double tax benefits applicable generally to gifts of appreciated property also apply to outright gifts of real estate you have owned for more than one year:

• An income tax charitable deduction equal to the fair market value of the property on the date of the gift
• Elimination of all or part of the capital gains tax on the property's appreciation

Example

The following example illustrates the advantages of an outright gift of appreciated real estate instead of a cash gift.

More than a year ago, Pat Bearcat purchased a parcel of real estate for $50,000. The current value of the property is $250,000. If Pat makes an outright gift of the property to Willamette University, Pat would receive an income tax charitable deduction of $250,000, the same as if Pat had made a cash gift of $250,000. However, by gifting the property instead of cash, Pat would eliminate capital gains tax on the $200,000 of appreciation in the value of the property. The value of eliminating capital gains tax can be substantial. Pat could save federal and state taxes in excess of 25% of the contributed property's appreciation by gifting the property instead of an equivalent amount of cash (tax savings of more than $50,000 in this example, in addition to the tax savings from the $250,000 income tax charitable deduction).

You can transfer low-yielding real estate to a charitable remainder trust, where the University, as trustee, can sell the property tax-free and invest the proceeds in a diversified portfolio of stocks and bonds.

Note that if you own property that has decreased in value, you generally obtain more favorable tax results by selling the property and contributing the cash proceeds to the University, rather than contributing the property to the University.

If you make a bargain sale of appreciated property to Willamette, you are treated as selling a portion of the property to Willamette, and making a gift of the remaining portion of the property. The double tax benefits apply to the portion of the property gifted to the University. In the case of a gift of a remainder interest in a residence or farm, where you retain a life interest, you also receive double tax benefits. However, your income tax charitable deduction equals the value of the University's remainder interest in the property, not the full fair market value of the property.

Increased Income and Diversification. Gifts of real estate can be used to fund life-income arrangements with Willamette, enabling many donors to diversify their investments and increase their income. For example, you can transfer low-yielding real estate to a charitable remainder trust, where the University, as trustee, can sell the property tax-free and invest the proceeds in a diversified portfolio of stocks and bonds.

Please contact the Office of Gift Planning at giftplanning@willamette.edu or (503) 370-6022 to discuss the nature of the real estate you are considering giving to the University.