A Culture of Generosity
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Caring for Creation
Growing Steward Leaders

A Gift of Real Estate

Did you know that you can immediately enjoy the substantial tax benefit associated with donating real
estate to the church while retaining the use of the property for the rest of your life (or for an agreed-
upon term)? This is called a gift of residual interest.

Like a Charitable Remainder Trust, a gift of residual interest in property gives a future interest but retains a present interest. Typically, a donor gives their congregation and/or The Presbyterian Church in Canada the ownership (future interest) in a primary residence or vacation cottage while retaining the use of the property (present interest) during their lifetime, with no impact on their lifestyle. In the case of a married couple, the surviving spouse retains the full use of the property.

By giving a residual interest in a property now, the donor will reduce current income tax and establish the donation as a “done deal.” This lowers the chance of later conflict as a gift of residual interest—long established and irrevocable by the time it is executed—is less susceptible than a bequest to being contested by heirs.

Gifts of residual interest appeal to:

  • Upper-income donors over 60 years of age, (typically 75 years of age or older)

  • Donors with extensive holdings

  • Donors who were planning a bequest and who would like to reduce income
    tax in the present year (while maintaining their current lifestyle).

In the case of a donated vacation
property that has appreciated in
value over time, the tax credit from
the donation will usually more than
cover the capital gains tax.

Though rules vary by province, a donor typically gives a residual interest in real estate through a
deed registered in the legal name of the charity. The deed also indicates the life interest. The
donor receives a charitable tax receipt immediately. The value of the tax receipt takes into account
an estimate of the number of years the donor expects to retain an interest in the property
according to current fair market value and the appropriate annual discount rate. If the receipt
exceeds 75% of your net income the year you make the donation, you can carry the excess tax
credit forward for up to five years.

Benefits of a gift of residual interest:

  • Control: You retain the use of the property for the duration of your lifetime. And
    you get to choose the area of the church you would like to support.
  • Eliminates Probate, Legal & Executor Fees: The gift removes the donated
    property from your estate. Your gift will not be subject to probate costs or
    delays in settlement. The full proceeds are payable upon your death.
  • Peace of Mind: You can plan, arrange and announce the gift yourself and you
    will know that it will occur just as planned.
  • Outside Your Estate: Your gift is not a matter of public record, allowing you to
    remain anonymous (if you wish). And this type of beneficiary gift cannot be
    contested.
  • Satisfaction: You have the satisfaction of knowing that you have created a
    lasting legacy and that your gift will support vibrant mission and ministry far
    into the future.
  • Immediate Tax Credit: You receive a charitable tax receipt at the time the gift is
    made for the net present value of the property.

Planned Giving

Adult child (heir 1)

Adult child (heir 2)

Charity

Case Study: Giving a Fraction of Residual Interest
Instead of donating the entire property, a home
owner could give a fractional portion of the
residual interest – for instance: one third. In this
example, the donor sets aside one third (of the
remainder interest) for each of two heirs and
immediately receives a donation receipt for the
present value of the fraction given to the church.

Every gift of residual interest is unique. An
appraiser must value the property and an
actuary will calculate the donation receipt.
Valuations of the property, life interest and
residual interest may be subject to review by
the Canada Revenue Agency. Responsibility
for insurance, upkeep, repairs, and property
taxes for the duration of the life interest
period will need to be negotiated. In the case
of a donated second home, vacation or rental
property that has appreciated in value over
time, it will be necessary to recognize a
portion of the capital gain (which the tax
credit will usually more than cover).

Once the property comes into the possession
of the church, the church can choose to
either keep the property or sell it and use
the proceeds.

For More Information
The Stewardship and Planned Giving staff are available to help you turn your philanthropic wishes into reality.
To learn how a Gift of Residual Interest or other planned gift can leave a lasting legacy, please contact us

  • or call the Stewardship & Planned Giving department, 1-800-619-7301.

  • or mail to: The Presbyterian Church in Canada, 50 Wynford Drive, Toronto, Ontario M3C 1J7.

  • or use the Contact Stewardship form

Charitable Registration No. 10785 6619 RT0001

The information on this page does not constitute legal or professional advice and should not be substituted for appropriate professional advice. The Presbyterian Church in Canada strongly recommends that you seek professional legal and financial advice to ensure your financial situation and those of your dependents are considered; that your tax situation is reviewed; and that your legacy gift is tailored to your circumstances.