When you make an outright, irrevocable gift of real property to the Museum during your lifetime, you become eligible for a charitable tax deduction equal to the full fair market value of the property, not just its original cost.
Because you realize those tax savings immediately, this arrangement may be preferable to leaving the property to the Museum in your will. In addition, as with a gift of securities, when you make a gift of appreciated property you avoid the capital gains tax at the time of transfer, providing you have owned the property for at least a year.
You might also find it attractive to use investment real estate to fund a charitable lead unitrust, or to transfer the deed of your primary residence or vacation home to the Museum while retaining the right to live there for your lifetime. You could even extend that right to another person for his or her lifetime, as well. You (or your beneficiary) would continue to take care of the property, pay the taxes, and even receive any income it generates. But, because you had made a gift of the property by deed, it would not pass through probate at death, and you would be allowed an income tax deduction for the year in which you initiated the gift.
Because there are specific issues involved in the donation of certain real property, if your intent is to make such a gift to the Museum, we ask that you discuss your gift in advance with the Museum’s Vice President for Institutional Advancement or with a member of the Museum’s Professional Advisory Committee, and, of course, with your attorney.