When charity begins at home

Written by Jeanne Thorne

By all accounts she had a definite presence in the neighborhood. We are told how she would walk her borzoi hounds around the historic 7th Avenue district. She was elegant and creative when she and her husband moved into the neighborhood in the late 1950s. Both were artists.

As the years passed, time inevitably took its toll. Her husband died and in her later years, she too suffered from ill health. There were, apparently, no relatives and when she drew up her estate she thought of her neighbors and a charity, the Salvation Army. When she died, six neighbors shared in her estate, but the home was donated to the Salvation Army, primarily because the owner was impressed by the non-profit organization's quick response to emergencies.

Since the organization is not in the business of real estate, a gift like this home needed to be sold. Noting the sign, Realtor Sonja Leonard Leonard, owner/broker of Leonard Leonard & Associates, who lives in the district and services real estate throughout the Capitol Hill area with a special interest, inquired of the Salvation Army how they were pricing the home. They had priced it at $190,000.

 The sale of this home in the 7th Avenue Historic District touched more lives and will continue to have an impact on the larger community due to having been donated to a charity.

Leonard asked to work on the sale and promised to price the home at a more realistic market value. She would waive her commission and work on the project without a fee.

The property was a valuable one. The home was built in 1907, a two-story brick described as a Georgetown-style townhome of approximately 1,740 square feet.In a very attractive area of stately homes, large trees, it is within walking distance of the Botanical Gardens, Cheesman Park, and the Cherry Creek Shopping Center.

But, according to Leonard, the home needed some repair and updating because the owner had been ill for some time. Because it had been donated to charity, it also offered a chance to market the home in some unique ways. Leonard decided to hold a series of open houses. Local television and other media were contacted. The sale would be done by a closed bid procedure. (The asking price on a prepared brochure was listed at $230,000.

"People came from all over to see the house," said Leonard, "some from as far away as Pueblo and Fort Collins. At an open house some people who had grown up in the house came back to visit and saw a mural on the basement wall that they had painted." Some who came to view the property were also thinking of donating property to a charity of their choice and wanted more information about the capital gains aspect.

"We all worked to generate the energy...the hype...for this sale," said Leonard. "All totaled we had about 400 people at the open houses. It was shown on television and another open house was by invitation only. When I listed it in Multi list I specifically said that there would be no commission paid on this sale, but other Realtors did show an interest in the property, even without the commission!" In addition to Leonard's pro bono work, others also volunteered their services. Land Title did the title work and closing for free. Stan Dexter of Metro Mortgage Consulting offered a "free loan" if needed. Neighborhood teenagers shoveled the walks and kept them clear of snow and ice. They also volunteered to serve refreshments at the open houses. Younger neighborhood children, who had established a clubhouse in the greenhouse, watered the plants and garden. Leonard has an assortment of letters, framed in her office, addressed to the departed owner by these children and left on the front porch. (One says "good-by for now.")

Ultimately, 11 sealed bids were received and the opening of those bids (filmed by KCNC-TV Channel 4) was quite an occasion. The bids ranged from $180,000 to a high of $242,000, with an average being $210,000 establishing this as the market value for tax purposes. Five offers were above the asking price. The winning bid was submitted by a young couple who were thrilled to be buying a valuable, historic property and making a donation to a worthy cause at the same time.

For people who have an estate that will be impacted by capital gains taxes ($600,000 and above), donating a property to charity is an option worth exploring. Especially if one has no surviving relatives, or if the children show no interest in the property. Otherwise, your property could go to the state.

We spoke with George Buckley, director of the planned giving department with the Salvation Army to find out more about how donations like this can be made.

There are two ways of setting up a charitable trust with the Salvation Army, he said. One is a Life Estate, whereby the home is given to the charity upon a person's demise. But until that happens, the person may live in the home, maintaining it and paying for upkeep, etc. The Internal Revenue Service will allow a charitable deduction up front or it can be spread out over a period of six years. When the person dies, the charity immediately takes over and the home will not have to go through probate.

Another option is the Charitable Annuity or Uniti-Trust. With this option, the charity would sell the house and avoid capital gains (28% federal, plus 5% state). The income from the trust would go to the donor for the rest of their life and they could take the charitable deduction for up to six years. The difference between the Annuity and the Uniti-Trust is interest earned. The Annuity is a fixed-amount, while the other might grow.

Stocks and bonds can also be put in charitable trusts said Buckley.

You should discuss these options with your lawyer and tax consultant and Buckley will be happy to give you more information concerning donating property to charities.

Everyone connected to this sale benefited. The neighborhood felt especially close. The response from the Realtor community was gratifying. Certainly the Salvation Army benefited and the money raised will stay in the Denver area to help those in need. The new owners are happy to have the property. And Leonard Leonard was happy to give something back to her community. "But...the owner really started this process..." said Leonard with a smile. "She was a classy lady."

Buckley can be reached at 861-4833 or 1-800-999-1865. Leonard Leonard & Associates can be reached at 744-6200.