The Oklahoma Bar Journal June 2024

R eal P roperty

Supporting Your Clients With Charitable Real Property Gifts By Christa Evans Rogers R EAL PROPERTY INVESTOR LOUIS GLICKMAN QUIPPED, “The best investment on Earth is earth.” In recent years, markets have bolstered his point with prices soaring to historic highs in many locales. 1 We have all heard the adage, “buy low, sell high.” For your clients who are charitably inclined and own appreciated property, it rings equally true “to buy low and donate high,” as this has the double bonus of increasing your clients’ tax sav ings and maximizing the impact of the clients’ gifts overall. While buyers lament the cur rent accessibility and cost of purchasing property, in the current seller’s market, donors and charitable organizations alike reap substantial rewards from real property donations.

a whopping 37% and exceeds retirement accounts as the other wise leading asset type. 3 This article will emphasize var ious factors to consider when cli ents express a desire to donate real property interests. Additionally, it will provide an introductory overview of giving solutions avail able for real property that can be tailored to accomplish your client’s specific charitable, income and tax objectives. COMMON INCENTIVES FOR DONATING REAL PROPERTY TO CHARITABLE ORGANIZATIONS Author Margaret Mitchell famously wrote, “Death, taxes and childbirth! There’s never a conve nient time for any of them.” 4 Many of your clients likely share this

Real property is one of the most commonly owned asset types, which makes donations of real property interests an option for many potential clients, regardless of their net worth. Clients on the higher end of the wealth spectrum are more likely to complete gifts during their lifetime, whereas estates, both large and small, remain excellent candidates for a gift made at death. In the United States, real property comprises a significant portion, if not the bulk, of most portfolios. According to the U.S. Census Bureau in 2021, on average, for individuals not in the top 1% of wealth, equity in one’s own home was the second largest asset they owned at 28%. 2 When combined with rental properties and other real property holdings, the percentage is higher at

sentiment and have a strong aver sion to paying tax when it could be legally avoided and is otherwise to their advantage. The Internal Revenue Code and underlying reg ulations state specific requirements for substantiating a charitable con tribution income tax deduction for gifts of real property worth more than $5,000. 5 Under the Oklahoma Rules of Professional Conduct as well as the rules for practicing before the IRS, you have duties as an attorney to counsel your client regarding these requirements so as not to jeopardize the client’s eligi bility to claim a charitable contribu tion income tax deduction. 6 Gifts of real property are amongst the most impactful and tax-efficient avenues to support charitable organizations. Property owners who have held assets for

Statements or opinions expressed in the Oklahoma Bar Journal are those of the authors and do not necessarily reflect those of the Oklahoma Bar Association, its officers, Board of Governors, Board of Editors or staff.

28 | JUNE 2024

THE OKLAHOMA BAR JOURNAL