Give your home? For charitable contributions, consider real estate.

• Author: Keith, John T.
• Position: ADVICE / PLANNED GIVING

REAL ESTATE VALUES HAVE risen dramatically in recent years, and many people now own multiple properties for recreation or investment. As you consider supporting your alma mater, church or any other favorite charitable organization, don't overlook those assets. You may be able to maximize your support of charity as well as your potential tax savings by contributing real estate.

Give real estate, receive income for life. You can contribute real estate to charity while also reserving a lifetime income to supplement your retirement income. With a type of charitable remainder trust known as a "flip trust," you can make a gift for the future benefit of your favorite charitable organization, obtain an income-tax deduction, avoid capital gains tax and receive an income stream for life.

Most donors choose bank trust departments or large charitable organizations that have the ability to serve as trustee. You may also have the opportunity to select your local community foundation in this capacity, particularly if you intend to support smaller nonprofits that are unable to manage trust assets.

Your trustee is responsible for liquidating the real estate, diversifying the trust's assets and making payments to you. When the trustee sells your real estate, you pay no capital-gains tax. After you pass away, the remaining assets will benefit the charities you named as beneficiaries. You receive a charitable deduction based on a qualified appraisal of the property at the time of your gift. However, the deduction will be discounted to reflect the present value of the charity's future benefit.

Most charitable remainder trusts have a payout rate of between 5 percent and 8 percent of the trust's net fair market value, depending upon the ages of the income recipients. The payout rate is chosen at the time of the gift and cannot be changed. Ideally, the trust's value will increase in the long term. If that happens, then the trust's income payments will rise as well, thus acting...