Campus Photos by
Joel Zwick
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| Charitable Gift of Real Estate Is a Win-Win |
Bruce and Pat Warnke Fischer (class of 1950) owned three apartment buildings in Ocean Beach. The units were especially well-maintained and also highly appreciated in value by the time the Fischer's decided they wanted to retire from being landlords. Their accountant, concerned about the capital gains tax liability when the buildings sold, suggested the Fischers consider a charitable solution to their situation.
If the apartments were placed in a charitable trust, the trustee could sell the apartments and bypass all capital gains tax. The trust could then pay a high rate of return on the full fair market value of the property to the Fischers for the rest of their lives. Upon their death, a generous gift would be made to SDSU. Their gift would result in a significant income tax deduction today. However, there was one big problem: mortgaged property cannot be used to fund charitable trusts, and all three properties had mortgages.
Fortunately there is a solution for situations like this: the largest property was sold outright, which netted enough money to pay off the mortgages on the other two properties. Significant capital gains taxes were owed on this first transaction, so Fischers placed the other properties into a charitable trust. Once the properties were placed into the trust the Fischers obtained a large income tax deduction, which more than offset the capital gains tax owed on the sale of the first property. The sale created an income stream with an eight percent return for life for the couple.
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4. You may print a CRT tri-fold brochure. The Overview and Benefits.
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