By Ilyce Glink and Samuel J. Tamkin
Q: I'm in the Atlanta area and listen to your show on Sunday and appreciate all that you do. I also love your books and give them as graduation gifts.
Other than investors, no one is buying homes in her area. The prices are so low (less than $10,000 per house) that my mother is considering donating it and taking the tax write-off to avoid the stress of finding someone to buy it.
I've done some research on this, but I'm not sure if this is the best way to go and, if so, what reputable organizations are out there. I would appreciate any advice you can give me.
A: You're right. If home prices in your mom's area are below $10,000, the costs of sale will eat up a bit of the little money she will get from the sale of her home.
However, any money from the sale will be money in her pocket. You'll have to sit down with your mom and her tax adviser and determine what tax advantage she would get if she donated the home to a charity -- assuming there are charities willing to accept the home.
If your mom's income is low, you might find that the benefit to her in a $10,000 deduction to a charity might only be somewhere around $1,500. To say it differently, if she has little income and pays some income taxes, she would reap a reduction in her tax payments of about $1,500. However, if she sold the home for $10,000 and received a net amount of $7,000, she would end up with quite a bit more in cash from the sale than from the donation.
She won't have the hassle of the sale if she donates the home but she also will end up giving up quite a bit of money. The charity will benefit from the donation, but your mom has to evaluate her financial situation first to determine whether the donation is better for her or not.
Once you decide what is best for her and if that choice is to donate the home, you can get a bit more information about charities from two websites: http://www.charitynavigator.com and http://www.bbb.org. You can research some of the charities and see if they meet your standards.
The bigger issue is finding a charity willing to accept homes and become responsible for the care, upkeep and maintenance of the home. You could ask your church or local religious groups to suggest charities accepting donated homes.
While it's up to your mom to make her choice, if she decides to sell the home, she'll have to work with a real estate broker who has had recent success working with investors and others who are buying homes in bulk.
Good luck, and please let us know what she decides to do.
(Ilyce Glink is the creator of an 18-part webinar and ebook series called "The Intentional Investor: How to be wildly successful in real estate," as well as the author of many books on real estate. She also hosts the "Real Estate Minute," on her YouTube.com/expertrealestatetips channel. If you have questions, you can call her radio show toll-free (800-972-8255) any Sunday, from 11a-1p EST. Contact Ilyce and Sam through her website, http://www.thinkglink.com.)
(c) 2014 ILYCE R. GLINK AND SAMUEL J. TAMKIN. DISTRIBUTED BY TRIBUNE CONTENT AGENCY, LLC.