STRATEGY
HOME GIVEAWAYS
up for a lawsuit later. They watch your back to make sure you don’t violate privacy laws. In general, they coordinate the pro- cess. These groups usually are well-meaning, but they do not necessarily protect their donor’s personal interests or those of the “winner” in the giveaway process. As a result, the happy new homeowners often find themselves in a worse position than they started by the end of what started as the year when their homeownership dreams came true. Real estate investors tend to understand better than any other professionals exactly what they stand to gain from giving away a house. Furthermore, investors are far more likely than other professionals to actually do it because it is far more likely an investor will have a home that is a viable candidate for a giveaway because a deal has dragged on too long, a vacancy problem has been insur- mountable, or they just need a really big tax write-off. Before you announce your own raffle on Facebook or call up the local homeless shelter and offer to sign over the title, however, make sure you are following these 5 best practices for effective, tax-advantaged home giveaways that will truly benefit the recipient and the community: NO. 1 Verify the property fits the need. Not every property is right for every service organization. For example, Ken Lacy, founder of Veterans Path Up, a 501(c)3 dedicated to helping honorably discharged veterans access affordable, stable housing, recalled an incident when his group facilitated a veteran’s transfer out of a property he had been gifted by another organization. “There had been two gunshot instances in the neighborhood where the property was located, and that veteran had PTSD,” Lacy explained. “We had to help him move out of a beautiful house because he never should have been living in that neighborhood in the first place. It’s so important to make sure you’re donating to an organization or individual who can effectively place its clients in the property.” NO. 2 Don’t be afraid to talk about failure. Organizations dedicated to placing individuals in homes should not be afraid to talk to you about situations in which they have failed. Not every placement will succeed, but it is important to optimize your chances if you want your substantial gift (this is a house, after all!) to really make an impact. Find out how the or- ganization supports recipients of its services after they are placed and ask about success and failure rates after those services end. NO. 3 Confirm your donation qualifies for a charitable deduction. Not every donation is tax deductible, no matter how char- itable your state of mind. You cannot deduct donations made directly to individuals, and only donations made to qualified
charitable organizations are eligible. Qualified organizations often post something called a “determination letter” from the IRS on their websites to show they are qualified, but you can also search directly on the IRS website. NO. 4 Factor in financial education. In most cases, successful organizations involved in pro- viding homes to any population of individuals require those individuals to support themselves after some predetermined length of time. Self-sufficiency in homeownership is more likely to occur if that organization offers or requires some form of financial education or homeownership “training” as part of the process of qualifying to receive a property. These
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Carole VanSickle Ellis is the editor of Think Realty Magazine. She can be reached at cellis@thinkrealty.com.
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I
t’s as much a part of the season as mistletoe and silver bells: the annual home giveaways start just after Hal- loween, around the time the Christmas lights and holiday dazzle show up on your local retailer’s shelves. St. Jude’s Children’s Research Hospital, among the biggest operators of home-giveaways, raffles off local properties donated, upgrad- ed, and often furnished and decorated by local and national sponsors. The program operates year-round, but the process makes a particularly big media splash around the holidays. One of the “ripple effects” of that splash tends to be that local real estate investors, some of the most community-oriented individuals imaginable, often decide to give homes in their own portfolios away as well. This admirable decision offers three substantial benefits to those investors:
NO. 1 They are doing something good for their community and, in most cases, for a family in desperate need of assistance.
NO. 2 They get lots of good publicity for their real estate business.
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NO. 3 The investor may receive tax benefits for the large charitable donation of a home. This practice has become so popular in recent years that there are actually many community programs offering home-giveaway services to investors. They will make sure your raffle is legal and your selection process won’t set you
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