Ask Elaine "Capital Gaines...... CHARITABLE REMAINDER TRUST"

Ask Elaine "Capital Gaines...... CHARITABLE REMAINDER TRUST"

Dear Elaine,

 My husband just recently passed and I have a summer home on the river that we bought over 30 years ago. In the last five years, my husbands health deteriorated and we stopped going and have rented it during that time.  It is now worth nearly 10 times what we paid for it, even with the recession, and I wish to sell it but I do not want to pay capital gains taxes and I am not interested in a tax deferred exchange for another property  being I am 76 years old. The house has no mortgage on it.

Is their any way I can sell it legally without paying so much capital gain taxes?

Thanks for your help,

Ricki  Blanton, Surry, Va.

Hi Ricki,

Yes, you can and I helped my clients who have done it several times. There is an entity called a CHARITABLE REMAINDER TRUST. This can be set up very easily with a qualified attorney and the procedure is as follows:

You gift you river home to a Charitable Remainder Trust (CRT) set up by your attorney. The Trust will have its own FEDERAL ID number just like a business. Then you have the house listed and sold. The amount it sells for is your charitable remainder trust contribution.

That money the TRUST receives for the river place should be invested in an investment vehicle such as an annuity that can pay a regular return to the Trust. YOU ARE ENTITLED TO RECEIVE a distribution from the CRT based on your age or if you want to have a joint beneficiary - the ages of both of you.

Based on your age with you as the sole beneficiary, you would be entitled to up to a 10% annual distribution form the CRT. So, say your if your river home sold for $500,000, you would receive an income of $50,000 every year for the rest of your life. You will also receive a tax write off for the contribution which you can carry forward up to five years currently.

You also have the option to set up a wealth replacement trust such as an ILIT - Irrevocable Life Insurance Trust - if you have heirs that you want to leave the value of the contribution to the CRT too on a tax free basis in most cases.

 If you want to know more and are considering doing one, contact me and I have qualified experts who have done this for many years with others seeking to do the same as you.

Thanks for Asking Elaine!

Elaine

By: Elaine VonCannon ABR, SRES, REALTOR, Notary, Team Leader, Residential and Commercial Property Manager, Managing Partner VonCannon-Starke Commercial Division, Member of the National Association of Residential Property Managers, Award Winning Agent, RE/MAX Hall of Fame, Licensed in Virginia, Member of Commercial Council VAR

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