Example of a retained life estate
Georgiana Gregory, age 79, purchased her home more than 30 years ago. It has recently been appraised for $500,000. The land is worth $200,000 and the building $300,000. The appraiser considers it to have a useful life of 40 years and a salvage value of $20,000 at the end of that period.
Ms. Gregory would like not only to continue living in the home for the rest of her life, but also to assure that it will eventually go to Medical Teams International so that it can be sold and the proceeds used to demonstrate the love of Christ to people affected by disaster, conflict and poverty around the world. She would also like to reduce her taxes now.
Accordingly, she deeds the property to Medical Teams International now, reserving in the deed the right to live in and otherwise use the property for the rest of her life. In so doing, she receives an income tax deduction of $322,825.
Note: The tax calculations assume a 4.0% federal discount rate.
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