MacKenzie Scott, ex-wife of Jeff Bezos, has made a significant contribution to the California Community Foundation, a Los Angeles based organization. The donation is comprised of two Beverly Hills mansions worth an estimated $55 million, which were transferred to the Foundation on July 29, according to records. The properties were purchased by the former couple in 2007 and 2017, for $24.4 million and $12.9 million, respectively, and are located on the same street. Scott received sole ownership of the properties following their divorce in 2019.
The Foundation says it intends to sell the properties, which will then allow it to invest in creating more affordable housing in the Los Angeles area. It also stated that about 10% of the funds will go towards an immigration integration program, per Fortune. Scott previously made a $20 million donation to the Foundation last year to establish the LA Arts Endowment Fund.
These two donations, however, barely even scratch the surface of Scott’s charitable contributions – she has already given away $12.5 billion as of March of this year, after pledging to give away most of her fortune. Other groups supported by Scott include Boys & Girls Clubs of America, Planned Parenthood and Habitat for Humanity.
Real Estate as Charitable Contribution?
If you don’t hear so much about real estate being given away as a charitable contribution, it’s because it’s usually something only the ultra-wealthy donate, according to Harvey I. Bezozi, a tax expert based in Boca Raton, Fla. “It’s much easier to donate cash, stocks, artwork, etc.,” Bezozi reasons.
“Charitable contributions of real estate require completion of Internal Revenue Service Form 8283, Non-Cash Charitable Contributions, Section B, and must include a professional appraisal and a signed declaration of the appraiser,” he says.
“Tax deductions by real estate donors can be calculated in two ways, based on either: (1) 30% of adjusted gross income (AGI); or (2) 50% of AGI. The 30% deduction applies when the property’s fair market value (FMV) is used without being reduced by cumulative appreciation. The 50% deduction is appropriate when the property’s FMV is reduced by the unrealized appreciation (the long-term capital gain portion). Here, a capital gain property election must be attached on an original tax return. Unused excess deductible contributions, exceeding AGI limits, may be carried forward and deducted in each of the next 5 years,” Bezozi adds.
Overall, the process of donating real estate can be somewhat more complex than giving away a piece of art or good old cash, but it’s something donors like Scott, who’s worth some $37 billion, can afford to do. It’s also one way to get rid of real estate that you don’t want to spend time selling. “Real estate donors can specify the property be left intact and used that way or have no restrictions and can be sold,” says Bezozi. As in this case, it appears that many foundations would have much more purpose for the funds if the property is sold, however, sometimes it can make sense to hold on to the property until it increases in value.