The current low interest rate environment has increased interest in legacy giving plans that use a factor tied to current interest rates to value the gift to charity. When interest rates are low, the value of the charitable portion of those giving plans is higher. One such plan is a gift of a remainder interest in real estate.

To give a remainder interest in real estate to charity, you simply deed property to a charity while retaining for yourself the right to full use and enjoyment of the property for a term of years or the rest of your life. At the end of your retained interest, the property is immediately owned by the charity.

The charitable gift is completed when you sign the deed giving the remainder interest to charity and deliver the deed to the charity, not when your interest in the property ceases. That means you can take action now, but continue to have use of the property for whatever period works for your situation.

The present value of the charity’s future remainder interest gift in the real estate may be taken as a current charitable income tax deduction if you itemize deductions. The shorter the term you reserve to continue to use the property the greater the value of your gift. For example, if you deeded a remainder interest in real estate to your church reserving the right to use it for five years, the value of your charitable gift would be approximately 85.5 percent of the market value of the property.

Real estate remainder interest gifts … a legacy gift plan that provides potential income tax savings to the giver now and a significant gift to charity in the future.