Time to Sell Rental Property? Avoid Taxes with This Gift Strategy

You've had a beach cottage for a number of years and it's served you well, appreciating in value and providing steady rental income. Maybe there is little to no mortgage on the property at this point. You no longer need the cottage, and you're ready to simplify your life and let go of this property. You obviously want to avoid paying hefty capital gains tax after the sale, but perhaps you would still enjoy some income from the property. One option is a Charitable Remainder Trust (CRT).

If you already give to one or more favorite charities, you might consider donating the property to create a Charitable Remainder Trust with the Outer Banks Community Foundation. You, your investment advisor or estate attorney, or the Community Foundation can serve as trustee. The gift is eligible for an income tax deduction, and capital gains tax is avoided. The trust sells the property and reinvests the proceeds in income-producing assets. You then receive income from the trust, either for life or for a specific number of years. You can even name a second beneficiary to receive those payments after your lifetime. At the end of that period, the remainder goes to the Community Foundation for an endowment to benefit your charitable interests. It could be a grant-making fund, a scholarship fund, or a designated fund for your favorite charities. Click here for more on tax advantages of CRTs, and call us if you would like to discuss your options. We would be happy to talk with you.

*Since your benefits may be different, you may want to click here to view an example of your benefits.