Hi and welcome to our site!There is no deduction to the buyer.The deduction might be allowed to the donor.
Can expenses incured in selling these inherited homes be deducted? Such as gas, hotel, cleaning, repair...
Generally, any part of the gross income of an estate or trust (other than a simple trust) that, under the terms of the will or governing instrument, is paid (or treated as paid) during the tax year for a charitable purpose specified in section 170(c) is allowed as a deduction to the estate or trust.
If the property is sold - selling expenses are added to the basis and as such are deducted against selling price. The gain/loss is calculated as (selling price) MINUS (adjusted basis)
Just for crazy ideas... if the buyer were to give a large donation to a foundation and in exchange get a deed of trust would the buyer get any charitable deductions?
Do you mean - deductible to the buyer? Or to the estate?
Deductible to the buyer.
Perhaps the buyer can buy at the deseased buying price and give a donation to the foundation for the difference?
First of all - donation must be made to a qualified organization.Then - if the donor received anything in exchange - the deductible contribution must be reduced by the value received.The acknowledgment from the qualified organization must say whether the organization provided any goods or services in exchange for the gift and, if so, must provide a description and a good faith estimate of the value of those goods or services.
There is a foundation established for years now. So in layman terms Yes to my question?
The taxpayer purchased an asset and immediately donated it to the qualified organization - for deduction purposes - the adjusted basis must be used. That includes an original purchase price plus improvements and some other expenses including purchase expenses.If you contribute property with a fair market value that is more than your basis in it - it should be a
a capital gain property in order to deduct the FMV - and not an ordinary income property.
Property is ordinary income property if you would have recognized ordinary income or short-term capital gain had you sold it at fair market value on the date it was contributed.So to claim a deduction for the FMV - the property must be held at least a year after purchase.
Property is capital gain property if you would have recognized long-term capital gain had you sold it at fair market value on the date of the contribution. Capital gain property includes capital assets held more than 1 year.
The buyer bought the home 10 years ago and the value has gone up. He passed away and is leaving the proceeds to an Art Foundation. If the buyer pays the Foundation the cost of the home and donates the difference would the difference be partially a tax deduction?
I'm asking about the new buyer.
I meant to say the seller bought the home 10 years ago.
If the NEW buyer purchases the home and shortly after donates it to the qualified organization - for deduction purposes - the adjusted basis must be used. That includes an original purchase price plus improvements and some other expenses including purchase expenses.
But if the new buyer lives in the property and doesn't donate it can he/she deduct the part of his cost that he donated to the foundation. For example the deseased bought the property for $1M and the new buyer pays $1M but donates $500k would the $500k be deductible?
I don't know if the new buyer would live in the home, second home or rental.
It doesn't matter what the deceased paid for that property.If the taxpayer who is alive donates a check of $500k to the qualified organization - yes - that amount will be deductible.If he donates a property that he owned less than a year - the basis is deductible.If he donates a property that he owned MORE than a year - the FMV is deductible.Meant - deductible as charitable contribution.If that is a rental property - property used in a trade or business is considered ordinary income property to the extent of any gain that would have been treated as ordinary income because of depreciation had the property been sold at its fair market value at the time of contribution.