Gifts Of Land Support Your Local Community

Gifts Of Land Support Your Local Community

Supporting your community through the gift of land provides the opportunity for you to leave a legacy that is local.

One of your most valuable personal and financial assets provides the opportunity to leave a legacy in your community and support charities you care about most. More farmers are considering the opportunity to donate their land to charitable organizations. Perhaps there is not a family member able to take over operation of the farm; you are ready for a transition, want to control how your land will be used in the future, or you'd like to support a charity in a unique way.

A recent report from the Iowa Farm & Land Chapter No. 2 Realtors Land Institute found a record increase in farmland values of 34.7% in the state for the 12 months ending September 1, 2011. With land values at record highs, a gift of farmland can make a large and lasting impact in your community. Sheila Kinman, director of advancement for the Community Foundation of Greater Des Moines, gives the following explanation of how this can work for you.

When you donate farmland you:

Receive the maximum income tax deduction allowed by law for charitable gifts

Remove appreciated assets from estate taxes

Bypass capital gains tax on appreciated assets

Attain personal financial goals while supporting favorite charitable causes

Attain a level of giving you may not have considered possible through an asset you already own

Preserve one of the greatest natural assets of Iowa — farmland. The gift remains locally owned.

You can choose to establish an income stream for yourself and continue to live on the farm by creating a life estate; you will receive a partial charitable income tax deduction.

Iowa community foundations, including the Community Foundation of Greater Des Moines, help donors give back to their communities by accepting gifts of land. Endow Iowa Tax Credits are available for farmers who gift their land through a community foundation to establish an endowment to benefit Iowa charities. Endow Iowa allows donors to receive a 25% Endow Iowa Tax Credit in addition to normal federal charitable income tax deductions.

When Russell Helms of Madrid in central Iowa, donated 83 acres of land to the Community Foundation to benefit the Madrid Community Endowment Fund and the Madrid Historical Society he said, "I hope this gift will inspire other farm and land owners to give and preserve their family's history and heritage. This is an example of what people in our state can do to make a difference in their communities."

Members of the Helms family have lived in the Madrid community for over 160 years and through this gift, the family's presence will grow as they plant seeds of giving for future generations.

Community Foundation works with donors and trusted financial advisors

The Community Foundation works with donors and their trusted financial advisors to make meaningful gifts and support charitable organizations.

You identify the farmland you would like to give; an appraisal establishes estimated market value.

You can establish a charitable fund in your name, in the name of your family or business, or in honor of any person or organization you choose. Then you decide what charities your fund will support.

If you choose to endow your fund to ensure future support of the community, your gift will be invested over time. Earnings from your gift are used to make grants addressing community needs. Your gift and all future earnings from the gift, is a permanent source of community capital.

Your gift qualifies for a tax deduction based on its full market value and you avoid the capital gains tax that would otherwise arise from the sale of the property.

The Community Foundation handles all of the administrative details so you can focus on a rewarding return on a major asset.

"With the appreciation of agricultural land, many landowners now have sufficient assets to leave a significant gift for charitable or community purposes as well as provide for surviving family members," says Ed Power, a professional advisor to the Community Foundation. He notes that current low interest rates have created a rare opportunity to maximize an individual's tax benefits through a reserved life estate or charitable trust.

The question of how much to leave your family can also be an important issue. With low interest rates and high land values, it is now much easier to provide for heirs and also establish a perpetual family fund for charitable causes.

The Community Foundation of Greater Des Moines is a donor-driven public foundation whose purpose is to improve quality of life. If you would like more information about gifts of land contact Sheila Kinman at 515-447-4207 or find your local community foundation at www.iowacommunityfoundations.org

In summary: More farmers are considering giving land to support local community charities. With land prices at record highs, gifting land makes big impact on a community. Iowa tax credits available if you gift land through local community foundation.  The accompanying table provides an example of the tax savings and impact with a one million dollar farmland gift.

Farmland gift savings and impact

                       

Gift Amount

$1,000,000    (fully deductible, up to 30% of adjusted gross income with a five year carry-forward of unused deduction)   

Cost Basis

$250,000

Savings

 

Endow Iowa Tax Credit (Calculation based on 25% of the fair market value of the gift)

$250,000

Federal Tax Savings*

$350,000       (35% of $1,000,000 deduction)

Capital Gains Tax Savings

$112,500       (15% of $750,000 gain)

Net Tax Savings

$712,500

 

Net Cost of Contribution

$287,500

* Approximated assuming donor is in the maximum 35% tax bracket and the gift is made with joint property

Source: Community Foundation of Greater Des Moines
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