Gifting of a lake condominium

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Gifting of a lake condominium

Postby Near retirement » Mon Jul 15, 2013 6:20 pm

I own my primary residence and also a lake condo. I still have a mortgage on the condo, though my primary residence is paid off. I have the condo on the market, but I have been approached by a local university RE: gifting the condo to the institution. Is this a prudent and financially advantageous (for me!) option? Are there other options for getting rid of the mortgage burden as I enter part-time work? Thanks for any guidance.

Regards, Near Retirement
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Re: Gifting of a lake condominium

Postby FNK » Mon Jul 15, 2013 6:26 pm

Well, you would be giving away your equity in the condo. You can write that off your taxes, assuming the university has nonprofit status, and you'll probably save the commissions, but still you're giving something away.

Is the university aware of the mortgage? Are they going to pay it off for you? A mortgage is a loan to you, not to the property, and it becomes due at the time of property transfer. If the idea is for you to pay the it off and give the place away, then it's probably a rather extravagant gift
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Re: Gifting of a lake condominium

Postby CABob » Tue Jul 16, 2013 5:39 pm

It sounds to me as if these are two separate issues that you are trying to combine into one. The first is the condo mortgage and how it will get paid off. The second issue is giving an asset of yours to the university which in IRS speak would be a donation rather than a gift. I don't see any advantage to you other than the usual warm feeling and tax deduction associated with a donation. What is the loan balance, your cost basis, and current fair market value of the condo?
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Re: Gifting of a lake condominium

Postby Near retirement » Tue Jul 16, 2013 9:16 pm

I see your point. My cost basis is 60,000 greater than what I owe on the mortgage. I owe about 150,000. Fair market value is about 230,000. I am considering paying off remainder of mortgage in order to eliminate monthly payment (and to avoid 3.75 % interest). Donating it to the university would have tax advantages, but not sure it makes sense.
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Re: Gifting of a lake condominium

Postby LadyGeek » Tue Jul 16, 2013 9:43 pm

This thread is now in the Personal Finance (Not Investing) forum (gifting real estate).
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Re: Gifting of a lake condominium

Postby MN Finance » Tue Jul 16, 2013 9:58 pm

This is a pretty strange question. Is it advantageous to give away property? Um, no. How is that ever beneficial, to reduce your net worth? It's not. If you want to get rid of the expense, you sell the place. Even if you need/want the tax deduction, you give away X value to save X times your marginal in taxes. Now, if you said, hey we want to help the university and would like to give them X dollars, what's the best way to do it, that's totally different. We give away 30k/yr because it supports our belief system, and oh by the way we get a tax break. Using that in reverse logic doesn't make much sense.
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Re: Gifting of a lake condominium

Postby SnapShots » Tue Jul 16, 2013 10:12 pm

Be very careful. A University or any non-profit is a Black Hole ... a bottomless money pit of donations that can never be filled. You are likely talking to one of the many young men who are sent out hunting for money, because you're name is on some list. Typically these guys know very little and have no interest in your welfare.

It might be good for you, but a University is not interested in your welfare. If you owe money on it, you should investigate...on your own...how it would benefit you and later the University. Then make your own offer to them.

Be careful and talk with someone who has your best interest in mind. Who you are talking to does not. Trust me. :greedy
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Re: Gifting of a lake condominium

Postby TRC » Wed Jul 17, 2013 7:25 am

Near retirement wrote:I own my primary residence and also a lake condo. I still have a mortgage on the condo, though my primary residence is paid off. I have the condo on the market, but I have been approached by a local university RE: gifting the condo to the institution. Is this a prudent and financially advantageous (for me!) option? Are there other options for getting rid of the mortgage burden as I enter part-time work? Thanks for any guidance.

Regards, Near Retirement


I don't think giving away a house with $80,000 in equity is a financially prudent thing to do.
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Re: Gifting of a lake condominium

Postby dickenjb » Wed Jul 17, 2013 8:04 am

IF you want to give $80K to the university this might be a good way to do it. Avoids realtor fee, cap gains tax on appreciation of 2nd home.

If you do not want to give $80K to the university, you should sell the house and pocket $80K less 6% realty fee on the sale price less 15% LTCG on the $80K appreciation.
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Re: Gifting of a lake condominium

Postby Near retirement » Wed Jul 17, 2013 5:26 pm

Thanks for the excellent feedback. I found it interesting that they approached me about this ...
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Re: Gifting of a lake condominium

Postby billern » Wed Jul 17, 2013 5:33 pm

Near retirement wrote:Thanks for the excellent feedback. I found it interesting that they approached me about this ...
It is a very smart way for them to look for money but I find it surprising. The non-profits are getting more sophisticated...
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