Real Estate Investing

Here are three great real estate-related gift ideas that also happen to be tax write-offs. These are kind of different, and may not be for everyone, but they’re worth a look at least.

Make It Right donation: This campaign, spearheaded by Brad Pitt, aims to build eco-friendly homes in New Orleans’ Lower 9th Ward, the area hardest hit by Hurricane Katrina. You could “adopt” an entire house, or only a piece of a house, as a gift to someone who needs nothing and who values such initiatives. And it’s a donation, so it is a tax write-off!

Give Your House Away: OK, so when you give your house away to a charitable organization like House Angel or Real Estate With Causes, you might not actually get to see the recipient’s response. But you’ll feel better having done some good. You’ll also get a tax deduction equal to the home’s current market value, not what its value was when originally purchased.

Buy a house for your college student: This is the ultimate gift for a college student. You can sign them up as co-owner and help build their credit as well, an added bonus. There are, however, pros and cons to this scenario. Consider it carefully before deciding one way or the other. But of course, it is well known that real estate ownership has tremendous tax benefits.

For those who have missed the Larry King special, missed the plethora of other media coverage, or who have generally been living under a rock, Brad Pitt is in New Orleans. He is spearheading the ‘Make It Right’ campaign to build 150 affordable, eco-friendly homes in New Orleans’ Lower 9th Ward, the area hit hardest by Hurricane Katrina. The effort is similar to one Pitt launched in August in partnership with the Global Green environmental organization. He points out the long-term money-saving power of “green” construction.

Pitt is saying $150,000 will get a family into a new home. He is actively seeking donations - even the “adoption” of a piece of the home, like a solar panel, a low-flush toilet or even low-volatility wall paint that improves air quality. The project enables people to “adopt” anything from $5 faucet aerators that reduce water use to $1,500 tankless water heaters that reduce water heating costs. The availability of nearby resources like wind, water and sun should make outside energy sources a thing of the past, according to Pitt.

“The idea that we pay utility bills is absolutely unnecessary,” Pitt said. “…We can integrate ourselves into that ecosystem and not only power our houses but actually produce energy for other parts of the city.”

We’ve heard about donating money, time, cars and even credit card rewards, but what about property? The New York Times has an interesting story about an elderly couple who donated a summer home to charity. The 80-something couple donated their island cottage, bought in 1965 for $20,000, and received over $6,000 monthly income and a sizeable tax write-off. Bonus: They designated the AARP and other charities of their choice as recipients, so they know the donation is going to causes important to them. According to the article, real estate donations are becoming more accepted.

Nonprofit groups once shied away from real estate, but more of them now encourage these donations, especially as property values soared in recent years. Some have established foundations or planned-giving departments, while others work with consultants to help with transactions. Many groups are gearing up for a spurt of year-end activity.

Still, only about two percent of charitable contributions each year are real estate, ranging in value from $250,000 to $15 million. This is one of the most flexible options when it comes to charitable donations. A property owner could do 100-percent donation or part-sell, part-gift. Real estate donations can avoid the capital gains tax altogether or help even out the tax picture when other property has been sold at large gains.

By and large, those who donate real estate to charity are successful, wealthy philanthropists who want to give back to the community, according to the article. So it’s an interesting idea, but may not be for everyone.