1 MINNESOTA PLANNED GIVING COUNCIL ACCEPTING GIFTS OF REAL PROPERTY 1167726.
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Transcript of 1 MINNESOTA PLANNED GIVING COUNCIL ACCEPTING GIFTS OF REAL PROPERTY 1167726.
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MINNESOTA PLANNED GIVING COUNCIL
ACCEPTING GIFTS OF REAL PROPERTY
1167726
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J. Patrick Plunkett
Moore, Costello & Hart, P.L.L.P.
55 East 5th Street, Suite 1400
St. Paul, Minnesota 55101
651-602-2615
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INTRODUCTION
• Definition of a “White Elephant”
• Review Applicable Legal Requirements
• Review Practical Considerations
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TITLE & ENVIRONMENTAL
• Commitment for Title Insurance
• Phase I Audit
• Standard ALTA Survey
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DUE DILIGENCE
• Written Contracts Regarding the Property
• Tax Statements
• Government Permits and Licenses
• Unresolved Claims and Disputes
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DUE DILIGENCE
• Title Policies, Surveys and Soil Tests
• Drawings, Plans and Specifications
• No Oral Contracts and Agreements
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ZONING & BUILDING CODES
• Government Approvals for Use
• Determination Prior to Closing
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PROPERTY TAX EXEMPTION
• Public Cemeteries, Schools and Hospitals
• Academies, Colleges and Seminaries
• Churches and Houses of Worship
• Institutions of Purely Public Charity
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INSTITUTIONS OF PURELY PUBLIC CHARITY
1. Helpful to Others Without Expectation of
Material Reward.
2. Whether Profits are Distributed to Private Interests.
3. Whether Dividends are Paid to Private Interests.
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INSTITUTIONS OF PURELY PUBLIC CHARITY
4. Whether the Organization is Supported by Material Contributions.
5. Whether Benefits and Services are Provided at Reduced or No Cost: Whether the Organization Lessens the Burdens of Government.
6. Whether Class of Beneficiaries is Restricted or Unrestricted.
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SEPARATION OF OWNERSHIP and USE
• No Exemption Allowed if Non-Exempt Use is Substantial
• Pro Rata Exemption Between Exempt Use and Non-Exempt Use
• De Minimis Non-Exempt Use may be Disregarded
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FILING REQUIREMENTS
• Initial Statement of Exemption
• Re-filing Every 3 Years
• Special Rules for Churches and Colleges
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BARGAIN SALES
• Part Gift and Part Sale
• Donation Equals Difference Between Fair Market Value and Sale Price
• Agreement Concerning FMV
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VALUATION & SUBSTANTIATION
• Deduction Equals Fair Market Value
• Appraisal Requirements
• Form 8283
• Form 8282
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TAXATION OF RENTS
• Generally Rental Income is not Subject to Unrelated Business Income Tax (“UBIT”)
• Exemption does not Apply if Services are also Provided
• Exemption does Not Apply if Property is Debt-Financed
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REAL ESTATE OUTSIDE MINNESOTA
• Requirement to Comply with Local Laws
• Need to Register to do Business
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TIMESHARES & CONDOS
• Partial Interest Rules
• Property Taxes and Association Fees
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GIFT ACCEPTANCE POLICY
• Identify a Bona Fide Purpose in Accepting the Gift Apart from the Intent to Accommodate the Wishes of a Valuable Donor
• Gift-Purchases Require the Use of a Standard Purchase Agreement
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GIFT ACCEPTANCE POLICY
• Undertake the Same Degree of Due Diligence Concerning the Ownership and Use of the Property as the Organization Would Undertake if it were Purchasing the Property
• Determine Whether the Property will be Subject to Real Estate Taxes, Assessments and Association Dues
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GIFT ACCEPTANCE POLICY
• Do Not Acceptance a Gift of Property that is Subject to a Mortgage, Lien or Other Encumbrance
• Gifts Subject to a Reserved Life Estate Must Include an Obligation on the Part of the Life Tenant to Bear All Expenses Connected with the Real Property During the Life Tenancy
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GIFT ACCEPTANCE POLICY
• Do Not Offer Any Opinion Concerning the Fair Market Value of the Property
• The Donor is Responsible for Obtaining and Paying for a Qualified Appraisal
• Acknowledge Receipt of the Property Only on a Properly Completed Form 8283
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GIFT ACCEPTANCE POLICY
• Do Not Accept a Gift of a Condo or Timeshare Unless the Condo or Timeshare Will Be Retained by the Organization in Furtherance of its Exempt Purposes
• Do Not Acknowledge as a Charitable Gift the Use of a Condo or Timeshare