I had posted some time ago about my idea to purchase a house in Ottawa, renovate it with as much donated time and materials as possible, sell it, and donate the profits to charity.
I went so far as to put an offer in on a house owned by the Public Guardian but my offer was turned down. Which was fine, actually, because it’s giving me some time to think about details.
My idea of donating profits sounded fine until I spoke with another lawyer (I was a lawyer for 30 years before I went into real estate) yesterday and realized that I would still get taxed on capital gains.
You don’t get 100% on the dollar back from charitable donations, so I’d have to pay tax on the difference, and that could be significant.
Hmm. The lawyer I spoke to (Leslie Kirk, who I highly recommend by the way: she specializes in real estate and estates/wills) thought maybe we could set up some kind of trust arrangement where I buy the house in trust for the charity involved, but that means talking to an accountant. Needless to say, I also need to protect myself too, for example if the market falls after I purchase and the house can’t be sold, so this will require some thinking.
Anyway, I got hold of Donna Hicks, the Executive Director of Habitat for Humanity, which is one of the two charities I had in mind (the other is the Royal LePage Shelter Foundation). She’s arranging for me to meet with her staff on Tuesday, when her accountant is there, to discuss how we might go about this.
And York Polk, my pal at Ottawamortgagebrokers.com says he’ll arrange financing at below current rates, so we’re on the road now.
I suppose if worse comes to worse, I’ll just go ahead, pay for the renos myself and decide later how much to donate to charity once I calculate my expenses, but I’d really love to do something that gets people engaged and involved in something that’s good for the community.
I’ll keep you posted!