Bill & Grace Avoid Capital Gains Taxes While Supporting Students
Bill and Grace met while teaching high school early in their careers and had rewarding experiences working with students. When they married, they decided to keep Bill’s home and make it a rental property. They were very pleased with this investment, providing good income over the years.
A few years ago, they both retired and enjoy traveling and spending more time with their grandchildren. They are ready to be done being landlords and want to get a small condo as a second home near their grandkids. They were ready to sell the rental house, but the property was worth more than four times what they paid, and they worried about the tax implications.
Their accountant told them that beyond the capital gains tax, they would have to pay taxes on all the depreciation they had captured over the years and that this taxable event would require them to pay net investment income tax as well.
Bill and Grace knew that they wanted to create a scholarship at Â鶹ӳ»´«Ã½ to make an impact through education. They met with the PC development office and their financial advisor to determine their options. Bill and Grace needed less than half of the value of the rental home to buy the condo near their grandkids. They decided to gift half the property to Â鶹ӳ»´«Ã½, and they sold the home.
They were able to fund a scholarship, get a tax deduction (which saved them taxes on half of the proceeds from the sale), and they were able to buy the condo they wanted. Bill and Grace were overjoyed with the gratitude and appreciation they received from the students they helped, and they had the freedom to travel and spend more time with their family.