In June of 1935, John Sprunt Hill donated the Carolina Inn to the University of North Carolina at Chapel Hill, stipulating that its profits support the North Carolina Collection in the University Library. N.C. Gov. J.C.B. Ehringhaus, who was also chairman of the UNC Board of Trustees, expressed to Hill “gratitude for this last of many manifestations of loyalty, love and generosity toward the University at Chapel Hill.”
This extraordinary gift continues to honor Hill’s philanthropic vision to this day. At the same time, the Carolina Inn serves as a wonderful host to guests from around the world and a great gathering place for the campus and community.
Roll forward to today’s era, when Steve Bell ’67 gave an LLC interest in three apartment units to the University, enabling him to receive a charitable income tax deduction for the interests’ appraised value. Revenue generated by the properties supports UNC Kenan-Flagler Business School and the Department of Music in the UNC College of Arts and Sciences. “I am proud of my alma mater and the role it plays in our great state,” Bell said. “Giving partial interest in a few quality investment properties was a win-win for Carolina’s mission and for me personally.”
In 2016, Hannah Malkin ’41 gave the University three parcels of land on Martha’s Vineyard, to be sold with proceeds enhancing the Moses M. and Hannah L. Malkin Professorship in Jewish History and Culture in the UNC College of Arts & Sciences. She received a charitable income tax deduction for the land’s appraised market value and avoided any capital gains taxes that she would have incurred had she sold the property outright. Hannah and her late husband Moses, also Class of 1941, established the professorship bearing their name in 2005 with a cash gift. “Our reason for the gift is really to thank UNC and the state of North Carolina for making it possible for each of us to obtain a very good education at a fine university at moderate cost,” Moses said at the time.
Gifts like those from Steve Bell and the Malkins, along with other real estate gifts made to the University, have helped build Carolina and strengthen its mission of teaching, research and public service.
Benefits of a Real Estate Gift
You can donate real estate to the University in several ways. Each has advantages, depending on your circumstances and goals. Some of the key benefits include:
- By donating your real estate to Carolina instead of selling it yourself, you may avoid capital gains taxes on the appreciated value of your property.
- Assuming you’ve owned the property for more than a year, you may be able to take a fair market value charitable income tax deduction as established by a qualified appraisal.
- By removing property from your estate, your future estate tax liability may be reduced.
- Donating your real estate to the University can remove you from the ongoing responsibilities of ownership, such as repairs, maintenance and property taxes.
- For donors facing the prospect of passing down real estate to multiple heirs who may each have different objectives, you can instead gift the asset to Carolina and retain other assets that are easier to pass down to future generations.
- You can direct the proceeds from your real estate gift to the school or program of your choice.
- You will have the satisfaction of knowing your real estate gift is providing significant support to the University.
Real Estate Gift Opportunities
The Office of University Development can assist you with a number of different gift options:
- You can make an outright gift of your primary or secondary residence or undeveloped land. If your residence has significantly increased in value, or you have a second home that your family no longer uses or wishes to maintain, an outright gift of the property to Carolina may be right for you.
- You can make a partial or outright gift of commercial property, such as an office, apartment or retail building. With capitalization rates at historical lows, and commercial property values at all-time highs, now is the ideal time to consider donating an investment property to Carolina.
- You can give your farm or vacant land that has development or sale potential. Farmland or vacant land that has the potential for real estate development by Carolina, or is otherwise highly marketable, can be a powerful, tax-efficient gift.
- You can donate your ownership interest in a real estate limited partnership. The value of a real estate limited partnership interest can be realized today by a gift to Carolina and subsequent sale of your interest.
- You may be able to donate other non-traditional forms of real estate. Non-traditional real estate ownership can take on many other forms, including private equity and operating partnership units. These may create an opportunity for a charitable contribution to Carolina.
Additional Considerations and Benefits of Giving Real Estate
- You can give property to establish a charitable remainder trust. A charitable remainder trust provides a future gift to Carolina, and a tax deduction and long-term income stream to you. The trust’s trustee, which could be Carolina, can sell the property without paying capital gains tax. The full proceeds from the sale can then be invested by the trustee to pay you and/or your beneficiaries an income for life or for a term of years. After your lifetime or when the trust term ends, the remaining funds will pass to the University for the purpose(s) you designate. You may also be able to use a partial interest in the real property to fund the trust and retain the cash proceeds from the sale of the remaining interest in the property.
- You can leave property to Carolina through a bequest. You can make a real estate gift through your will or estate planning documents. Typically, the executor of your estate will sell the property, and Carolina receives the sales proceeds to use according to your wishes.
A Few Things to Know Before Giving Real Estate
- Carolina will sell your gift property and direct the sale proceeds per your wishes.
- We will gratefully review your real estate to determine whether it can be sold within a reasonable amount of time and to ensure that it has acceptable liabilities, if any.
- If you intend to claim a charitable income tax deduction, the IRS will require you to obtain an independent, qualified appraisal to determine the property’s fair market value. We, along with your advisor, can assist you in following the appropriate IRS procedures for your appraisal with your tax advisor.
- Because of tax issues, debt-encumbered property is typically not advantageous to give to charity. However, a gift planning expert is happy to review the structure of any asset to assist you in your determination.
- Depending on the circumstances, Carolina may choose to hold limited partnership or LLC interests in real estate until the fund liquidates. Distributions received during the holding period will be used per your wishes.