• IRA Rollover
  • Impact our future through planned giving

    Impact our future through planned giving

    • Touch the lives of others while creating a lasting legacy
    • Find peace of mind through a wide variety of tax benefits
    • Help the University of Michigan achieve its goals for current and future generations
Text Resize

Real Property Gifts Make Sense

Are you interested in selling real property to generate income, reduce the hassle of ownership, transfer ownership to family members, and support Michigan without realizing significant capital gains? If so, a gift of property to a charitable remainder unitrust may be an attractive option. Properties that make great charitable gifts include a house or condominium, farmland and undeveloped land, commercial property, timberland, or vacation homes.

Highly appreciated property can be transferred to a charitable remainder trust without the realization of capital gains. A unitrust is an excellent vehicle for gifts of property because the trust is tax exempt and does not pay capital gains tax when it sells the assets. Instead, the full sale proceeds remain in the trust to provide a payout to the income beneficiaries. A FLIP unitrust is generally recommended for low or non-income producing property to ensure that cash or other assets are available to make the required unitrust payments to the named income beneficiaries; especially if the length of time needed to sell the property is uncertain.

With a FLIP unitrust, language in the trust limits the distributions from the trust to net ordinary income until a date in the future, such as the date of the sale of the property, when the trust "flips" to a standard unitrust.

As of January 1 after the flip date, the unitrust operates as a standard unitrust and provides a variable payment to income beneficiaries for life, or a term of no more than 20 years. As a standard unitrust, the trust distributes its stated payout percentage multiplied by the fair market value of the trust assets, and is revalued each year with no net ordinary income limitation. Because the flip date can be set for a date when you expect to retire, a FLIP unitrust may also be a good option if you wish to plan for retirement.

When the unitrust term ends, the principal in the trust passes to the University of Michigan to be used for the purpose you designate.

Five Reasons to Give Real Property

  1. No more real estate taxes.
  2. No more cost of ownership (maintenance, insurance, upkeep) or hassle of selling.
  3. Unproductive land can be put to a higher use.
  4. Property can be used to provide meaningful support for Michigan.
  5. Property can be transferred to a trust or gift annuity for added benefits.

The University of Michigan has 501(c)(3) non-profit tax exempt status; our federal tax ID number is 38-6006309.

Copyright © 2018 Regents of the University of Michigan
The University of Michigan Office of Development, 3003 South State Street, Suite 9000, Ann Arbor, MI 48109-1288

© 2018 Crescendo Interactive, Inc. PRIVACY STATEMENT
This site is informational and educational in nature. It is not offering professional tax, legal, or accounting advice.
For specific advice about the effect of any planning concept on your tax or financial situation or with your estate, please consult a qualified professional advisor.