Charitable Remainder Trust: Sell Your building, Owe Nothing at Closing, Get Paid for Life

David Wiener: You can sell a building worth $1.3 million and nobody owes a dime of tax the day it closes. Every dollar of the sale gets reinvested and you collect a check from it every year for the rest of your life. There's a catch, and it's a big one. When you're gone, what's left doesn't go to your kids. It goes to a charity you picked. Congress wrote that trade into the tax code in 1969. Most real estate investors have never had it explained to them. And this year, the rules around charitable giving moved more than they have in a long time. I'm your host, David Wiener. If we've met at a conference or an investor meetup, you probably know me as Mr. Cashflow. Today is about a tool called a charitable remainder trust. It's one of the oldest exit strategies in the tax code for somebody sitting on highly appreciated property, and it's one I've never given a full episode to. We've covered the 1031 exchange. We've covered holding a property until death and the step up in basis for your heirs. We've covered Delaware statutory trusts. The charitable remainder trust is the door nobody on this show has opened yet. Here's what you'll leave with. How a charitable remainder trust works in plain English, what happens inside one to all the depreciation you've taken over the years, because that part almost never gets explained. What changes in 2026 for anybody who itemizes and gives to charity? And the mistakes that have cost people their deduction, their tax savings, or both, in real tax court cases. It's built for three people. The real estate investor who'd sell tomorrow if it weren't for the tax bill, and who's tired of being a landlord. The business owner, thinking about year-end giving, who's heard the phrase donor-advised fund and isn't sure it applies to them. And the tax professionals listening because there's a 2026 change to how charitable deductions get figured for high earners that's going to surprise some clients in in filing season this year. Plus a depreciation wrinkle in here that I don't see written about very much. Two things worth hanging around for. Around the middle, I'm going to take one fourplex and run it two ways. Sell it outright or put it in a trust first. Real math, labeled as an illustration. And before that, I'll walk through what happens when the property you're thinking of giving away has had a cost segregation study done on it. That's the part of this topic that sits right on top of what I do every day. And it changes the deduction in a way most people don't see coming. So let's start what this thing actually is. A charitable remainder trust is an irrevocable trust you set up and fund with property. Irrevocable means once it's in, it's in. You can't take it back out. The trust pays someone an income stream. Usually that's you or you and your spouse. It can run for your lifetime or for a set term of up to 20 years. That's in section 664 of the tax code. When the payments end, whatever's left in the trust goes to one or more charities. That leftover piece is the remainder, and that's where the name comes from Charitable Remainder Trust. Here's the part that makes it interesting for real estate. The trust itself doesn't pay income tax. Section 664 says a charitable remainder trust isn't subject to the income tax. So when the trust sells your building, there's no capital gains tax due inside the trust on the sale. The wholesale price stays in the trust and gets reinvested. That doesn't mean the tax disappears. Hold on to that thought because it's the most misunderstood part of the entire strategy, and I'm going to give it its own section. There are two flavors. The first is a charitable remainder annuity trust, which people shorten to C R A T. It pays a fixed dollar amount every year set on day one. Put in a million dollars, pick five percent, and you get fifty thousand dollars a year every year, whether the investments do well or badly. You can't add property to that one later. The second is a charitable remainder unit trust or a C R U T. It pays a fixed percentage of the trust's value revalued every year. Pick 5% and the trust is worth a million this year, you get $50,000. Next year it's worth $1.1 million, so you get $55,000. A down year you would get less. But you can add property to a unit trust later. The tax code puts guardrails on both. The payout has to be at least 5% and no more than 50%. And the piece projected to reach charity has to be worth at least 10% of what you put in, measured the day you put it in using the IRS's tables and interest rate. That 10% test is why an older donor can usually pick a higher payout than a younger one. Longer expected payments leave less for charity. For real estate, the unit trust usually is the better fit. And there's a version built for exactly this situation. It's called a flip unit trust. While the trust is holding a building that hasn't sold, it pays out only what the property actually earns, which might be very little. Once the property sells, the trust flips to a regular percentage payout starting January one of the next year. The regulations name the sale of real estate as an event that can trigger the flip. Without that feature, a trust holding one vacant building could owe you a payment that it has no cash to make. So where's the deduction? You get a charitable deduction in the year you fund the trust. It isn't a deduction for the full value of the property, it's for the present value of what's projected to go to charity someday. It's figured with the IRS actuarial tables and the interest rate the IRS publishes each month, and it depends on your age, the payout you pick, and how long the payments run. Your planner runs that number. I'm not going to guess one on a podcast. So the trust hands you three things at once. A sale with no tax due on the day it closes, a stream of income for life or a term of years, and a partial deduction now. In exchange, the property and eventually whatever it turns into leaves your family. That's the deal. Which raises the obvious question: if the trust doesn't pay tax when it sells, who does? Here's the rule that keeps this from being a free lunch. When the trust pays you, every dollar you receive carries a tax label, and the tax code decides the order of those labels. It's called the tier system, and it's in section 664B. Payments come out first as ordinary income the trust has earned interests, rents, short term gains, then as capital gains, then as tax exempt income. Only after all that runs out do you get a tax free return of principal. The regulations add a layer inside those tiers. Within each one, the income taxed at the highest rate comes out first. So inside the capital gains tier, the gain taxed at the higher rate is paid to you before the gain taxed at the lower rate. Now bring your depreciation into it. If you've owned a rental for 15 years, you've been taking depreciation every year, and every dollar of it lowered your basis. When the building sells, The part of the gain that comes from depreciation on the building itself is called unrecaptured Section 1250 gain, and it's taxed at a federal rate of up to 25%. The rest of the long-term gain tops out at 20%. Episode 17 on depreciation recapture walks through both of those buckets if you want the full version. Here's what happens inside the trust. The trust sells your building and owes nothing. But it keeps track of that gain by class in its books. Then as it pays you, the 25% depreciation gain is the first capital gain out the door because it's the highest rate class. Your early payments are likely to carry that depreciation gain. Later payments carry the 20% gain, and it all gets reported to you on a K1 every year. So the depreciation doesn't vanish. It gets taxed to you a slice at a time as you're paid. What you've changed is when. Instead of paying it all in the year of the sale out of the sale price, you pay it over years on payments from money that's been fully invested the whole time. That's the real value of a charitable remainder trust for an investor. Deferral and spreading plus income plus a partial deduction paid for with a gift. Elimination isn't on the menu. And there's one more depreciation piece. If you've ever had a cost segregation study on the property, some of your depreciation was on parts of the building the tax code treats as personal property or land improvements. When those sell, part of that gain comes back at ordinary income rates, which are higher than either capital gains rate. Inside a charitable remainder trust, that ordinary income goes to the very front of the line and it comes out first. It also hits you a second time on the deduction. That deserves its own section and it's coming right up. Quick stop first. The Tax Strategy Playbook Newsletters at taxstrategyplaybook.com/newsletter It's free and it gives you access to my 2026-2027 tax planning guide and playbook notes for each episode at no charge. This week's notes put the tier system on one page top to bottom so you can see the order the tax comes out in. So go ahead and subscribe. Now, the full first thing most people want to do with a charitable gift is deduct it. And that's exactly where 2026 changed things. The One Big Beautiful Bill Act changed charitable deductions starting with the 2026 tax year. Three changes are significant here and they hit different people differently. First, there's a floor. If you itemize, your charitable deductions now count only to the extent they're more than half of 1% of your adjusted gross income. That's in section 170B With an AGI of four hundred thousand dollars, the first two thousand of giving produces no deduction. For a one time very large gift, that's a rounding error. For somebody with a high income who gives a few thousand a year, it can wipe out most of the deduction. Second, a ceiling on what a deduction is worth at the top. Section sixty eight now trims itemized deductions by two thousand. 37ths for taxpayers in the 37% tax bracket. In practice, a dollar of itemized deduction saves those taxpayers about 35 cents instead of 37. People call it the 35% cap, and it applies to all itemized deductions, charitable or not. Third, the good news for people who don't itemize. Starting with 2026 returns, if you take the standard deduction, you can still deduct up to $1,000 of cash gifts and or $2,000 if you're married filing jointly. It has to be cash and it has to go to a qualifying public charity. Gifts to donor-advised funds don't count for it. The IRS put out a one-page publication on this in October. On top of all of that, the limits that always applied to appreciated property still apply. Give appreciated property you've held more than a year, like a stock or real estate, to a public charity, and that deduction is generally capped at 30% of your AGI for the year. Anything over that carries forward for up to five years. Give it to a private foundation, and the cap is generally 20%. So what does that mean for year end? For the business owner who itemizes and gives every year, the floor pushes toward bunching. Instead of giving $10,000 a year for five years, some people give $50,000 in one year, clear the floor once, and take the standard deduction on the other years. A donor-advised fund is the usual tool. You contribute this year, take the deduction this year, and recommend grants to the charities you care about over the years that follow. And for anybody giving at all, The best thing to give usually isn't cash. It's appreciated stock you've held more than a year. Donating appreciated stock generally gets you a deduction for its full market value and nobody pays tax on the gain. That's the most common year-end move I see, and it works the same for an investor as for anybody else. Can real estate go into a donor-advised fund? Some sponsors take it, usually debt-free commercial or investment properties above a minimum size. And usually with the plan to sell it, but it's slow. The sponsor wants title work, environmental review, and an appraisal before it'll say yes. If you're thinking about a building in a donor-advised fund for this year, that conversation really needed to start in September. For a building, next year is the realistic target, and the trust we're talking about today is often the better fit anyway, because it pays you an income. Here's the hard edge on the calendar. A gift has to be complete by December 31st to count for 2026. For stock, that means the shares have landed in the charity's or the funds account, not that you called your broker on the 30th. For real estate, it means a deed delivered and accepted and a charity or trust willing to take it, which takes weeks normally. And for property worth more than $5,000, you need a qualified appraisal. Over $500,000, the appraisal gets attached to your return. Get that wrong. And that deduction can be denied outright, even when the gift was real. You'll hear about a court case where exactly that happened. That's the deduction side. Now the part I promised. What happens to the deduction when the building you're given has been through a cost segregation study? This is the section that sits on top of what I do for a living, and I want to be careful with it. Back in episode seven, Dave Foster described an investor who cost segregates property so they can later donate them to charity at a fair market value. People do combine the two, but there's a rule that rides along with it, and it rarely gets its way into the conversation. Section 170 E of the tax code says that when you give property to charity, your deduction is reduced by the gain that wouldn't have been long term capital gain if you sold the property instead. And the code goes out of its way to say depreciation recapture under sections 1245 and 1250 counts as that kind of gain. Translate that. When a cost segregation study moves parts of a building into five, seven, and 15-year property, the depreciation on the five and seven year pieces is Section 1245 depreciation. Sell the building, and that comes back as ordinary income. The accelerated part of the depreciation on 15-year land improvements, the portion above what straight line would have given you, also comes back as ordinary income. That's Section 1250 recapture. So if you give that building away, your deduction shrinks by the ordinary income amount. A building that's been cost segregated can't be deducted at its full market value. You get market value minus the recapture that would have been ordinary income. The myth that circulates goes like this cost segment, take the big write off, then donate it at full value and deduct the whole thing too. You've heard the same depreciation get deducted twice in that sentence. The tax code only lets you have it once. The depreciation on the main structure is different. The 27.5 or 39-year part taken on regular straight-line schedule produces unrecaptured Section 1250 gain. That's still long-term capital gain for this purpose, so it doesn't reduce the deduction. That's why a plain rental that never had a study can often be given at close to full market value. And the same building with a study generally can't. Inside a charitable remainder trust, the same idea shows up twice. The 170E reduction shrinks the deduction you get when you fund the trust. And when the trust sells, the ordinary income from recapture lands in the trust first tier and gets paid out to you before any capital gain. Is that a reason you shouldn't have done the study? No. Look at what happened. You took those deductions years ago at your ordinary rate against income you were paying tax on, and you had the use of that money the whole time. The study did its job. It just means that when you plan a gift, the component breakdown from that study is exactly what your appraiser and your tax professional need to figure the deduction correctly. If you can't find the report, call the firm that did it. Now a judgment call comes up. You own a building that never has had a study and you're planning to put it into a trust. Should you do a look back study first? A look back catches up all your missed depreciation in a single year through a Form 3115 with no amended returns. We covered how that works in episode 27. It creates a deduction now. It also creates more ordinary income recapture inside the trust and a smaller charitable deduction. Which way comes out ahead depends on your bracket now, your bracket while you're receiving payments, and the size of the property. Run it both ways with your tax professional. Nobody should answer that one for you from a podcast, and I won't do it. That's also the kind of question the no-cost analysis exists for. Want to know whether a study would even pay for itself on your building before you decide whether to keep it, sell it, exchange it, or give it? If you own investment or commercial property, I'll run that through CSSI at no cost for you. There's no obligation, I won't pitch you. If a study won't pay for itself, I'll definitely say so. Book a study at calendly.com/david-wiener/cs That's W-I-E-N-E-R. Or just call me at 770-224-8504-option two. Okay, enough rules. Let's put a building through it. What follows is an illustration. I built it to show how the pieces move. It isn't a particular client. The numbers are rounded, and I'm leaving out selling costs and state tax so that the math stays readable. An owner bought a fourplex in 2010 for $500,000, closing costs included. The county assessors ratio put the land at 20%, so the depreciable building was $400,000. No cost segregation study. Straight line over 27 and a half years. That's about $14,500 per year. By the end of 2026, this owner has taken roughly $245,000 worth of depreciation. The adjusted basis on the property has dropped from $500,000 then to about $255,000. That fourplex is worth $1.3 million today. The owner's in their mid-60s, kind of done with tenants, has no mortgage left, and gives to a couple of charities every year. Here's path one, sell it outright. The gain's 1.3 million minus 255,000, about $1,045,000. The $245,000 that came from depreciation is taxed at up to 25%. That's about $61,000. The other $800,000 is taxed at up to 20%. That's $160,000. And because this is investment income at this income level, the 3.8% net investment income tax generally applies on top, about $40,000 more. So call it roughly $261,000 in federal tax due with the return for the year of the sale. That leaves about $1,040,000 to reinvest. Put that in something paying at 5%, and it's about $52,000 a year, and the principal stays in the family. Second path would be same fourplex contributed to a flipped charitable remainder unit trust before there's any contract to sell it. The trustee lists it, finds a buyer, and sells for $1.3 million. The trust owes nothing at the sale. All $1.3 million gets reinvested. The trust flips to a 5% payout the next January. That's about $65,000 the first year. Moving each year with the trust's value. That's $13,000 a year more income than path one from the same building before you count any deduction. Then the deduction. In the year of the gift, the owner gets a charitable deduction for the present value of the remainder. With no study on this building, there's little or no 170E reduction, so it's figured off close to the full market value. It's limited to 30% of their AGI that year with five more years to use whatever's left. And the tax? Still there. That $65,000 a year comes out under the tier system. First any ordinary income the trust earned, then the 25% depreciation gain, then the 20% gain. For the first several years, much of what this owner receives is taxable at all those rates. They're paying the tax on the fourplex one slice at a time on payments from money that's still fully invested. Now change one fact. Same fourplex, but back in 2018, the owner had a cost segregation study done, and some of the building moved into five, seven, and fifteen-year schedules. Say that by now, $80,000 of the depreciation they've taken is the kind that would come back as ordinary income if they sold. Still an illustration. If they gave the fourplex straight to a charity, the deduction would be $1.3 million. It'd be $1.3 million minus that $80,000 or $1.22 million before the 30% limit. In the trust version, the same reduction applies to the piece of the gift that's headed to charity. So the deduction shrinks in proportion. And when the trust sells, that $80,000 lands in ordinary income tier, which means it's the very first thing paid out to them, taxed at their ordinary tax rate before a dollar of capital gain. Did the study cost them? No. They took $80,000 of extra deduction back when it counted at their ordinary rate and invested the difference for eight years. They just can't deduct the same dollars a second time when they gave the building away. That's the whole rule in one sentence. What does it cost them? When this owner and their spouse are both gone, everything left in the trust goes to the charities they named. The kids don't inherit the forplex. or anything it turned into. Run the comparison straight. If this owner's real goal is to leave the most to their kids, there's a strong case for neither path. Hold the fourplex until death, and under current law the heirs generally get a step a basis to market value, which wipes out both the capital gain and the depreciation gain. Episode 19 on the assets that help or hurt your heirs covered that. A charitable remainder trust is for the owner who wants out now, wants income, and has real charitable intent. Beating the step up isn't what it's for. If they want to make the kids whole anyway, some families use part of the extra income and the tax savings from the deductions to buy life insurance, held in an irrevocable life insurance trust and sized to replace what goes to charity. That's called wealth replacement. Whether it pencils out depends on age and health, and it's a conversation for an estate attorney and an insurance professional together. So that's how it's supposed to work. Here's how people have broken it. Five ways in the order they usually happen that it goes wrong. The first is timing, and it's the most expensive. If you've already got a deal to sell, it's too late to give the property away and have the trust sale escape tax. The doctrine is called anticipatory assignment of income. And it's been in the case law since the 1930s. If the right to the sale proceeds has already ripened when you make that gift, you're treated as the seller and you owe the tax on the gain the charity collected. The case everybody in this field reads is the estate of Hoenshield, a 2023 tax court memo. A business owner gave about $3 million worth of shares in his company to a donor advised fund right before the company sold. He'd been told the gift had to happen before the purchase agreement was signed. He waited as long as he could to make sure the sale would actually go through. The court said that by the time he gave the shares, the sale was virtually certain and taxed him on the gain. Then it denied his charitable deduction too because his appraisal wasn't done by a qualified appraiser. He paid tax on a gain he didn't keep and got no deduction for the gift. The court's line is worth remembering. To avoid this, the donor has to bear at least some risk at the moment of the gift that the sale won't close. In practice, that means the property goes into the trust before there's a signed contract, and ideally before a sale is close to certain. The second is debt. And with real estate, it's the biggest practical obstacle. When you give property that's subject to a loan, the regulations treat the loan balance as an amount you receive. Part of the gift becomes a sale, called a bargain sale, and you can owe tax on that part. Gets worse. In a private letter ruling which only binds the taxpayer who asked for it, the IRS said a trust that pays a mortgage the donor is still personally liable for gets treated as the donor's own trust and fails as a charitable remainder trust altogether. And debt financed income inside the trust can create what's called unrelated business taxable income. Charitable Remainder Trust pays an excise tax equal to 100% of it. Most planners want that debt paid off before the property goes in. Third is the appraisal, which Hohenschild already showed you. Property worth more than $5,000 needs a qualified appraisal by a qualified appraiser, and the rules on who counts are specific. Over $500,000, it goes in with your return. A cheap appraisal can cost you the entire deduction. The fourth one is self-dealing. The trust can't do business with you. You can't live in the property after it goes in, rent space from the trust, borrow from it, or buy the building back. The rules that police private foundations apply to these trusts, and the penalty starts with the person who did the dealing. The fifth is administration. The trust files its own return every year, Form 5227. It needs a trustee who will invest for both you and the charity, pay the right amount on time, and keep the tier records straight for decades. And the trust document has to meet the IRS's requirements from day one. The IRS publishes sample trust language, and attorneys who do this regularly start from it. This isn't a do-it-yourself document. Which brings me to the myths. There are three major myths going around and one of them the IRS now formally treats as an abusive tax shelter. Myth number one a charitable remainder trust means you'll never pay capital gains tax. You've already heard why that one's wrong. A trust doesn't pay tax when it sells, you pay it as you're paid in the order the tax code sets. Deferred and spread out? Yes. Erased? No. Anybody pitching this as a way to make capital gains disappear is either confused or they're selling something else. Myth two is a dangerous one. It shows up in pitches that go something like this: put your appreciated property in a charitable remainder annuity trust, have the trust buy an annuity with the sale proceeds, and the payments you get back are tax-free return of the annuity's cost. The gain never gets taxed at all. The IRS put this arrangement on its dirty dozen list of tax scams. Its proposed regulations in 2024 to make it a listed transaction. And in July of this year, Treasury finalized them. A listed transaction is the IRS's formal label for an abusive tax shelter. If you're in one, there are disclosure requirements and penalties for not disclosing, and the advisors who sold it have reporting duties of their own. So here's the label plainly. A properly drafted charitable remainder trust is a settled, legitimate part of the tax code. The annuity version is abusive and it's listed. If somebody pitches you a version where the gain never gets taxed at all, that's the tell. Myth three is one I hear from investors. If I do this, my kids lose. Sometimes that's true, which is why the step-up comparison matters. But for a lot of families, the honest comparison isn't trust versus inheritance. It's trust versus selling and paying the tax now, because they were never going to hold on to the property until they died anyway. They won out. For that family, the trust can mean more income now, a defined amount for the kids through wealth replacement, insurance, and a gift to something they care about. The math decides it. And so do your goals. One smaller myth, since it comes up with donor advised funds, I'll put it in a donor advised fund and still use the money for my own expenses later. You won't. A gift to a donor advised fund is a completed gift. The sponsoring charity has legal control. You recommend grants, and the money doesn't come back to you or pay for benefits to you. One request before we go on. Somebody came to mind in the last 10 minutes. The landlord who keeps saying they'd sell if it weren't for the taxes. Or the business owner who writes checks to charity every December and has never asked about giving stock instead. Send them this episode, just that one person while you're thinking of them. Now Who is this actually for? Because it isn't for most people. A charitable remainder trust tends to fit when most of these are true. You own a property worth a lot more than you paid for it. It's free of debt or very close to it. You'd sell it in the next year or two anyway. You want income from it for life or for a set number of years. You give to charity already, or you'd like to, and you're comfortable making a decision you can't undo. It tends not to fit when you need the sale money as a lump sum, when the property carries a real mortgage, when the gain is small because setting one up and running it costs real money, and on a small gain those costs eat the benefit, or when the plan was always to hold until death and let the step up do the work. Here's how it lines up against the other exits we've covered. A 1031 exchange defers all of the gain, depreciation gain included. As long as you buy more real estate, you stay a real estate owner and you keep the asset in the family. Episode seven has the full version on that one. A Delaware statutory trust is at 1031 into a passive fractional property. Still deferral, still real estate, less management. That was episode 13. Holding until death gets your heirs a stepped up basis to market value under current law. You keep the property and the headaches so they get the cleanest tax result. Selling outright is simple. You pay the tax this year and you've got the cash. And the charitable remainder trust gets you out of real estate entirely, reinvested in whatever the trustee picks with income for life, a partial deduction now, the tax spread over the years you're paid, and a gift at the end. No single one of those wins for everybody. Plenty of owners use two of them on different properties. The 1031 on the building they want to keep growing, the trust on the one that they're finished with. For business owners, the same tool works with appreciated stock in a company you're about to sell, and the timing rule from Hoenshield applies even more sharply. If a letter of intent is on the table, talk to your attorney before you sign anything else. For tax professionals, three items for the year-end checklist on clients who give. The half percent floor for the clients who give steadily and itemize. The two thirds The 237th reduction for clients in the top bracket. And for any client who's given away depreciated real estate or a business with depreciated assets, the 170E reduction, which needs the depreciation history by component to get right. The last one is where a client's cost segregation report earns its keep a second time. Here's what setting one up looks like, start to finish. An attorney drafts the trust, usually starting from the IRS sample language. You pick the trustee, the payout, and the charities. A qualified appraiser values the property as of the gift date. You sign a deed moving the property into the trust with no sale contract in place. The trustee lists the property and sells it on trustees' terms. The trust flips to its regular payout the following January. Every year after that, the trust files its return and sends you a K1 showing which tier your payments came from. Your tax professional claims the deduction for the year of the gift with the appraisal attached if it's over a half a million dollars and carries forward whatever the 30% limit doesn't let you use that particular year. Budget weeks, not days, from the first attorney call to the deed. That's why a December decision for this year is tight, and a decision this winter for a sale next year is comfortable. Let me take the questions that didn't fit really anywhere else. Can I be the trustee of my own charitable remainder trust? Often yes, with limits. When the trust holds hard-to-value property like real estate, the valuations have to come from an independent trustee or qualified appraisal. Your attorney sets that up. Can the trust hold a rental and keep renting it? It can hold the property, but debt financed rental income can trigger 100% tax, and a flip unit trust holding a building is usually set up to sell it. Can I name more than one charity? Yes. Many trusts also let you change the charities later as long as each one qualifies. Can my spouse keep getting payments after I die? Yes. Two life trusts are common. The deduction is smaller because the payments are expected to last longer. Can I put property I've owned less than a year? You can, but the deduction for short-term property is generally limited to your basis. Not its market value. Most planners wait. What payout percentage should I pick? Well, it's a trade. Higher payout, more income, smaller deduction, less for charity, and it still has to pass the 10% test. Your planner will model a few. Is there a minimum size? Not in the law. In practice, the legal appraisal and trustee costs make small trusts hard to justify. Get an estimate of the setup and annual costs before you commit to it. Does a donor advised fund gift count toward the new $1,000 or $2,000 deduction for people who don't itemize? No. That one's only for cash to qualifying public charities, and donor advised funds are excluded. If I give appreciated stock to a donor advised fund in December, when's my deduction? It's in 2026 as long as the shares land in the funds account by December 31st. Start the transfer early. Brokers get swamped, especially that last week. Can I give property straight to a charity instead of a trust? Yes. You generally get a deduction for the full market value minus any 170E reduction, subject to the 30% limit and no income back. A lot of charities don't want to own buildings, so ask before you deed one over. Can a charitable remainder trust do a 1031 exchange? There's really generally no reason to do so. The trust doesn't pay tax when it sells, so there's really nothing to defer. What happens to suspended passive loss on a property I put in the trust? Ask your tax professional that before you transfer anything, the rules for losses on property you give away aren't the same as when you sell it, and it can change the math for you. Can I put a property that's owned by my LLC into a trust? Sometimes, but it changes what's actually being given, an interest in the LLC rather than the deed, and that changes the appraisal and the tax treatment. That one belongs with your estate attorney from the start. Is charitable gift annuity the same thing? No. A gift annuity is a contract directly with a charity. You hand over the property, the charity promises you fixed payments for life, and there's no separate trust. Simpler, but you're relying on that charity's promise, and plenty of charities won't take real estate for one. Does the trust have to sell the building? No law forces it, but a building that stays in the trust keeps generating the administration, the valuation, and the payout problems we talked about, which is why the Flip Unitrust exists. Is this contested? The trust itself? No. It's been in the code since nineteen sixty nine. And the IRS publishes sample forms. The annuity scheme is abusive and listed. Inflated appraisals get challenged all the time. That's the ground. Now the part you can act on. Time for the playbook. Five moves and the order matters. Step one list every property that you own that you'd sell in the next two years if taxes weren't in the way. For each one, write down what you think it's worth, the mortgage balance, and two dates, the purchase or closing date and the date it was placed in service. If there's meaningful debt on that property, it probably isn't a trust candidate yet. Mark it and move on. Step two, find your adjusted basis and your depreciation history on each one. That's what you paid, plus improvements minus every dollar of depreciation allowed or allowable. If you had a cost segregation study, find the report. Because its component breakdown is what figures the 170E reduction. Of everything on this list, basis is where people get stuck the very most, especially if there have been improvements along the way or nobody ever split the land from the building properly. If you get stuck on that, call me and I'll help you work it out. No charge for that. Step three. Before you sign a listing agreement, a letter of intent, or a purchase contract on any of these properties, sit down with an estate attorney who drafts charitable remainder trusts and with your tax professional. Bring the numbers that you got together in step one and two. Ask them to run selling outright against a flip you to trust and a 1031 if you'd stay in real estate. Ask what setup and annual costs look like as well. Step four, settle this year's giving before December 31st. If you itemize, ask your tax professional whether bunching through a donor-advised fund beats giving the same amount every year under the new floor. If you give at all, ask whether you should be giving appreciated stock instead of cash and start those transfers by mid-December. If you don't itemize, keep your receipts for cash gifts. To qualifying charities up to $1,000 or $2,000 on a joint return. Step five. If any of these properties has never had a cost segregation study, find out what one would turn up before you decide what to do with the building. Sell, keep, exchange, or give. That number changes the math. Book the no-cost analysis with me. If a study won't pay for itself or it doesn't fit the plan that you're leaning toward, you'll hear that from me first. A charitable remainder trust is a way to sell without writing the check that day, keep all of the money working, get paid from it for life, and leave something behind for a cause you picked. For the right owner with the right building, that's a good trade. For everyone else, it's worth knowing that the door is there. If this was useful, send it to the one person who came to mind and subscribe wherever you're listening. Next Tuesday, the R&D series picks back up with part three. What the IRS looks at when it reviews an R&D credit and the records worth building before the year's out. This is education. Every situation in this episode needs professionals who know your facts. And on this topic, that's a real estate attorney and a tax professional working together. Tax evasion is a crime, but tax avoidance is mandatory. I'm David Wiener, Mr. Cashflow. See ya next week on the tax strategy playbook.