Many savvy Jewish National Fund-USA partners have taken advantage of the increase in real estate values over the last several years. Disposing of a successful investment, however, can take almost as much effort and thought as investing in the first place. With every successful investment, your silent partner and favorite Uncle Sam comes looking for his portion of your good fortune. The way you dispose of real estate can make a big difference in the property's ultimate success because of capital gains taxes due on the sale as well as possible estate taxes that can still be significant.

 

Jewish National Fund-USA's Planned Giving professionals can show you how to dispose of appreciated real estate using a charitable remainder trust. You can save thousands in taxes, avoid capital gains taxes, provide income, pass more of the estate to heirs tax-free, and provide vital support for JNF-USA's long-term projects.


Here's an example of how this works:

 

David and Robyn, Jewish National Fund donors for 30 years, have owned an apartment building for the last 15 years. Originally purchased at $300,000, they now can sell for close to $1,000,000. After all these years, they are ready to sell the building, but then there will be approximately $250,000 in taxes due because of federal capital gains taxes and state taxes. They are also doing estate planning and realize that the bulk of this windfall will also be taxed at death, leaving very little for their children.

 

Jewish National Fund was able to show David and Robyn that if they donated the building to a Charitable Remainder Trust that named Jewish National Fund as the final remainder beneficiary, they could achieve the following.


  • Create an annual income equal to 5% of the fair market value of the trust assets every year. In this case, $50,000.
  • Avoid the capital gains taxes due on the sale, saving them almost $250,000. 
  • Create an immediate income tax deduction of close to $600,000, saving them nearly $300,000 in income taxes.
  • Remove the $1,000,000 value from the estate saving possible estate taxes.
  • Create a lasting endowment for Jewish National Fund.

While the idea sounded great, David and Robyn were concerned that they were disinheriting their children by giving such a large amount to Jewish National Fund. Robyn and David learned by purchasing life insurance on their joint lives with a portion of the tax savings or the trust's income; they could guarantee their children would receive the value of the gift free of estate and income tax.

 

After reviewing the details with their advisors, Robyn and David decided that this was a great idea. Save thousands in taxes, reduce the estate tax, receive income, give the children tax-free money from the estate, and help Israel with a lasting family endowment that will forever tie them and their children to Jewish National Fund and the land and people of Israel.
It indeed was a winning idea for everyone concerned.

 

If this idea sounds interesting, please call one of our Jewish National Fund-USA Planned Giving professionals, and we will be happy to provide you with all the details needed to make an informed decision. Contact us at 800-562-7526, plannedgiving@jnf.org, or request your free estate planning guide at jnflegacy.org.

 

We look forward to hearing from you.