More Information About Remainder Interests in Homes

A gift of a remainder interest in your residence or farm allows you to make a gift of your home or other appropriate property now, while you continue to live there for the remainder of your lifetime or as long as you wish. You continue to enjoy the full rights and responsibilities of ownership.

Example

Marjorie, 77, lives in the home she and her late husband purchased a number of years ago. Marjorie plans to leave the majority of the estate to her children who live out of state, but has decided she would like to make a substantial charitable gift in memory of her husband. The home is valued at $500,000.

After talking with her children, Marjorie decides to make a gift of the home now, while retaining the right to live there for the rest of her life. In so doing, she gains the satisfaction of knowing she has made a meaningful gift in honor of her husband, she enjoys an immediate income tax deduction, and the home has been removed from her estate for tax purposes.

Summary of benefits:

  • An immediate income tax deduction of $350,083 is allowed.
  • The complete right of ownership is retained for life or other period donor determines.
  • The property is removed from both taxable and probate estates.
  • Enjoyment of the property can continue for life of spouse or other survivor if desired.

 Return to Basic Version

The assumed date of transfer for this example is November 17, 2017. This example has used  the October 2017 IRC Section 7520 discount rate of 2.2% to optimize the charitable deduction.

NOTE: This calculation is provided for educational purposes only. The type of assets transferred, the actual date of the gift, and other factors may have a material effect on the amount or use of your deduction. You are advised to seek the advice of your tax advisors before implementing a gift of this type.

 

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