Real Estate Gifts In Canada, What is the Lay Of The Land And How Is AFP Involved?
by Daniel Brunette
Unless you are working with affordable housing or environmental charities, you probably haven’t considered the implications of titleholding real property or real estate, a conservation easement or ecologically sensitive land.
Charities must approach real estate like any other gift-in-kind and obtain the required information from independent appraisers. In a nutshell however, you can either keep the land for your purposes (i.e. affordable housing, conservation) or sell the real estate and use the proceeds to further your mission.
Donations of ecologically sensitive land (to relevant charities) are already advantageous from tax relief point of view, but all other real estate is still subject to taxes on about half of the capital gain, based on the donor’s marginal tax rate.
The AFP Government Relations Committee is actively advocating for the measure, championed by well-known donor and charity advocate Donald K Johnson, that would encourage more real estate gifts in Canada.
The proposal would allow donors who sell private company shares or real estate to an arm’s-length party, and then donate the cash proceeds (or a portion of the proceeds) to a registered charity within 30 days of the sale, to be exempt from capital-gains tax on the portion donated. This was included in the 2015 budget but removed in 2016.
“Charities benefited enormously from the removal of the capital gains tax on charitable donations on listed securities in the 2006 budget,” said Johnson. “Donations of listed securities have topped $1 billion virtually every year since 2006. Providing a similar incentive for donations of private company shares and real estate would result in an additional $200 million per annum in donations. The 2017 budget is a great opportunity to unlock even more private wealth for public good.”
To get more information and see a sample letter you can personalize to send to your Members of Parliament, click here.
Daniel P. Brunette is the director of development and donor services for the Community Foundation of Ottawa. He also serves as chair of AFP’s Government Relations Committee.