Planned Giving News Archives
Vacation Home Can Provide Income and a Vacation
Fall has arrived and memories of family gatherings at the beach or the mountains linger. Many people own a vacation cabin at the coast or a mountain hideaway. It may have been owned for many years. The children grew up playing on the property. Now the grandchildren romp through the dunes.
That cabin is still a focus of family gatherings, however you now may be thinking more about the challenges and benefits of owning that vacation spot. Would it be possible to be able to continue to have the family enjoy that special place, and also benefit from some additional income during your retirement years?
Yes – that vacation home can be a source of additional income for you!
The key planning vehicle is a life estate. This is also called a gift of a remainder interest in a residence, vacation home, or farm to a charity. The gift is made by transferring the ownership of the property to George Fox University while you are living, and you retain the right to use the property for the rest of your life. The donor receives a current income tax deduction for the gift that can be used to reduce one's current taxable income. A life estate involving your vacation home may be combined with a charitable gift annuity to provide current income tax savings while enabling you and your family to continue to use the cabin as a special retreat. You receive additional income through the gift annuity.
- Retain the use of your vacation home by you and your family for as long as you live.
- Receive additional income for your retirement years.
- Receive an income tax deduction in the year of your gift.
- Reduce the size of your estate or solve estate planning challenges while you are living.
- Provide a legacy to George Fox University.
The amount of the annual annuity payments is based on the remainder value calculated under the life estate agreement. Because the gift annuity provides income to you, the tax deduction available to you is lower than if you only established the life estate agreement. Minimum age for participation in the life estate/gift annuity program is 75.
Example:
Bill and Helen have a condominium at Gearheart that they have owned for 15 years. They are 77 years old. The family enjoys coming to beach and spending time with grandma and grandpa. However, the condominium does not have the same appeal to Jill and Harold, their two grown children.
Bill and Helen could also use some additional income during their retirement years. The condominium has a current market value of $300,000. Bill and Helen paid $175,000 for the unit many years ago.
By combining a life estate with a gift annuity, Bill and Helen would receive almost $10,000 per year in additional income for the rest of their lives. They also benefit from an immediate income tax deduction of $59,374. And the grandchildren can still look forward to spending time at the beach with grandma and grandpa.
For more information about life estate agreements involving your vacation home or residence, contact Gene Christian at gchristian@georgefox.edu or 503-554-2106. Financial and tax deduction calculations, customized gift plan proposals and counsel are available at no charge or obligation.