Capital Gains Tax Bypassed On Sale Of A Home

Carol purchased her rental property in 2000. Carol no longer wants to be a landlord and plans to sell but is concerned about capital gains tax.

Carol: When I purchased the condo 20 years ago for $250,000, I never imagined it would be worth was it is today. I want to sell in a few months and have been told the property could be listed for $1M. This would mean I would have to pay capital gains tax on $750,000! A friend of mine used a charitable remainder trust (CRT) with the sale of her property a few years ago. She told me how she worked with her attorney to create her CRT and then transferred the property to the trust before the property was listed for sale. Because her CRT sold the property, my friend did not have to pay capital gains tax when the property sold. She received a significant tax deduction and will receive income from her trust for her lifetime. And, also important to my friend, she was able to name several charities as the beneficiaries of her CRT.

Carol, a long-time volunteer, contacted By the Bay Health to learn more about the benefits of creating a charitable remainder trust. After a personal consultation with a gift planning specialist, and a review of the information she requested, Carol is now working with her attorney to create a CRT to use with the sale of her rental property.

Carol: The idea of bypassing capital gains tax, getting a tax deduction, and receiving income for my lifetime were very appealing benefits of using a CRT with the sale of my condo. Also very appealing was my being able to name By the Bay Health and other charities I have volunteered with as beneficiaries of my trust.

Is Using a Charitable Remainder Trust With the Sale Of Appreciated Real Estate Right for You?

If you own highly appreciated property, such as real estate or stocks, you could benefit from a sale and unitrust. The trust will help you bypass capital gains, will provide you with a charitable income tax deduction in the year of the gift and could increase your income. The sale part of this transaction could provide you with a one-time lump sum payment.

*Please note: The names and image above are representative of a typical donor and may or may not be an actual donor to our organization. Since your unitrust benefits may be different, you may want to click here to view an example of your benefits.