CASH & SECURITIES - ENDOWMENT GIFTS - REAL ESTATE - LIFETIME INCOME

A gift of real estate can be an attractive way to make a substantial commitment to Harvard Medical School and to realize important tax and income benefits at the same time. You may be able to reduce significantly the amount of income, capital gain, and estate taxes you otherwise would have to pay. You also may be able to earn an income from your gift. Finally, the disposal of your property can relieve you of management worries. There are many types of real estate which can be suitable for a gift to HMS, including gifts of a personal residence, vacation home, farm or ranch, commercial property, building lot, agricultural land, and undeveloped or unimproved land. Outright Gifts You may deed the property to the President and Fellows of Harvard College for the benefit of Harvard Medical School. Harvard then would sell it, unless there was a special reason for holding the property. You would benefit from an income tax charitable deduction for the appraised full fair market value of the donated real estate. (Any unused deduction can be used in up to five succeeding years.) Gift of Partial Interest You may deed to the President and Fellows of Harvard College for the benefit of Harvard Medical School an "undivided fractional interest" in your property, if you are not prepared to dispose of the entire property. The appraised value of the fractional interest is deductible for income tax purposes. Such a gift can be especially useful in providing a deduction to offset a capital gain generated by the subsequent sale of the entire property. Upon the sale, you and Harvard Medical School share proportionately in the proceeds. Gift with Retained Life Tenancy You can deed your home, vacation home, or farm to the President and Fellows of Harvard College for the benefit of Harvard Medical School, and retain the right to use the property for your lifetime (and your spouse's). You receive an immediate income tax charitable deduction for the interest deeded to Harvard. Life Income Trust You can transfer your property to a Harvard-managed trust designed to pay you and/or another beneficiary an income stream for life. Harvard would sell the property and reinvest the proceeds in accordance with your objective. You receive an immediate income tax charitable deduction for a portion of the appraised value of the property. In addition, Harvard can sell your property with no capital gain tax liability. Moreover, you receive investment diversification and professional management through the Harvard Management Company at no cost. Charitable Lead Trust You may place income-producing real estate into a charitable lead trust to benefit Harvard Medical School, and ultimately your heirs. During the trust term, an income stream would flow to Harvard Medical School. At the termination of the trust, the property would pass to your heirs. Such an arrangement can be effectively utilized to transfer property to your heirs at a reduced gift and estate tax cost, particularly if you expect the property value to increase substantially over time. (Typically, this arrangement is appropriate for high net worth individuals with investment real estate worth $500,000 or more.) Bequest You may make a testamentary gift of real estate under your will or revocable trust, using many of the methods discussed above. Other Considerations Gifts of real estate require written appraisal and IRS Form 8283 to substantiate your charitable income tax deduction. For your protection, you should not enter into any type of binding agreement to sell the real estate before deeding the property to Harvard. Mortgaged property requires special planning. In many cases, a gift of a fractional interest in the property can avoid any adverse consequences. For More Information Mary Moran Perry mperry@hms.harvard.edu Director of Gift Planning Harvard Medical School 401 Park Drive Boston, MA 02215 (800) 922-1782 or (617) 384-8449 Fax: (617) 384-8488