Commercial Investment Real Estate

MAY-JUN 2014

Commercial Investment Real Estate is the magazine of the CCIM Institute, the leading provider of commercial real estate education. CIRE covers market trends, current developments, and business strategies within the commercial real estate field.

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16 May | June | 2014 a Birgit Reitz-hofmann/Thinkstock The CCIM Foundation has developed Real Estate Gif ing Realized (www.realestate gif ing.org), a program that allows CCIM members to realize a unique win-win oppor- tunity when they participate in transactions A tremendous opportunity exists for commercial real estate agents to produce additional income and public relations benefi ts by providing professional services to some of the 1.6 million U.S. public charities. These charities process roughly $3 billion in real estate donations every year, from property types that include single-family homes, apartment buildings, shopping centers, industrial complexes, timber and mineral rights, medical offi ces, and vacant land to name a few. Here's how to solve planned real estate gift conundrums. by Chase V. Magnuson, CCIM Donation Equation IN V E STMENT A N A LY S I S involving charitable gif s of real estate. Prac- titioners who understand and use the tools this program provides may generate new sources for income, including new listing and sale assignments, consulting projects, joint venture development, and estate trust representation. T e niche market of managing the real estate donation process takes a combina- tion of understanding the various gif ing arrangements charities and donors might use, tax implications, and relationship nur- turing with the involved parties. CCIMs have these skill sets; by repositioning them, they can access the transaction f ow created by gif ing arrangements. Many charities have very broad fundrais- ing ef orts with specialties in real estate dona- tion. Donors fund their philanthropic goals while achieving worthwhile tax savings. T ere are numerous reasons donors decide to gif their properties rather than sell them, including interest in avoiding taxes, stepping out of property management responsibilities, solving estate and family issues, or exchang- ing equities for lifetime incomes guaranteed by the charity. A Case Study T e following case study presents some of the issues and challenges that occur in real estate gif ing transactions. A donor approached a fundraising staf member at George Washington University with an of er to donate her rental condo- minium. She was very excited because it was under contract to sell for $550,000 with clos- ing to take place in 10 days. T e university requires the fundraising staf to work with a real estate specialist when dealing with potential real estate donations, and at the f rst meeting with the donor, they discussed the prearranged sale. T e donor was advised that the university would be happy to receive the gif , but under the circumstances, the donor would be sub- ject to a huge capital gains tax. (T e basis in the property was $50,000). T e donor did not understand why the charity would not accept the gif and give her full gif credit. T e initial gif of the condo was to be the f rst of two property gif s she would use toward fund- ing an ultimate gif of a $1 million endowed scholarship. She planned to add the equity in a second property to the pool for the endowed fund. Should the two net equities not equal $1 million, she intended to make up the short fall with a provision in her will 1 6 - 1 7 D - I n v e s t m e n t . i n d d 1 6 16-17 D-Investment.indd 16 4 / 2 9 / 1 4 4 : 5 8 P M 4/29/14 4:58 PM

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