Charitable Remainder Trust is a fabulous thing if you own many assets. It allows you to benefit from the proceeds of the assets for the duration of your life, while it preserves them for a charity of your choice. As a real estate investor you are always haunted by the capital gains tax. There is no way to avoid taxes, or is there?

Charitable Remainder Trust Tax Benefits

We already discussed the basics of charitable trusts here. You pay taxes on everything you own or money you make. Once you end the ownership, you are free from tax liabilities. However, that doesn’t mean you don’t receive any earnings. All you must do is appoint yourself to be the Trustee. Since you’ve setup a remainder trust, you have the option to choose if some or all proceeds will go to you. Any money you receive is, of course, subject to income tax. However, you do not pay taxes on the appreciation of the assets you transferred into the charitable trust.

The Impact

The Trust is managing your assets and you get straight income without the headaches. In addition, you get a current income tax deduction. In the end you get rid of your properties, benefit from them for the rest of your life and upon your passing, they ownership is transferred onto the Trust’s appointed beneficiary. A charity of your choice. And the best part is, your heirs can still benefit tax free. Actually, even more than if you held on to your assets, but that’s a topic for another article.

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