Life Estate Agreement - Term of Years

Prepared for: Donor name

A. Input Assumptions
Date of Transfer April 12, 2024
Fair market value of property transferred $400,000.00
The term of the life estate will last for 6 years
Current value of depreciable property (improvements) $360,000.00
Estimated useful life of depreciable property in years 40 years
Expected salvage value of depreciable property (improvements) $100,000.00
IRC Sec. 7520(a) election to use 2/2024 discount rate of 4.8%
The mortality table is based on the census taken in 2010
B. Calculation of Income Tax Deduction
1. Current fair market value of life estate property $400,000.00
2. Current value of depreciable portion of life estate property $360,000.00
3. Salvage value of depreciable life estate property $100,000.00
4. Portion of property considered to be depreciable (Line 2 minus Line 3) $260,000.00
5. Number of years in term 6 years
6. Estimated useful life of depreciable property (in years) 40 years
7. Line 5 or 6 (whichever is less), multiplied by Line 4 $1,560,000.00
8. Line 7 divided by Line 6 $39,000.00
9. Ending value of life estate property (Line 1 - Line 8) $361,000.00
10. Remainder factor in Table B opposite number of years on Line 5 0.754801
11. Present value of remainder interest (Line 10 * Line 9) (the tax deduction) $272,483.16

NOTE: This calculation is provided for educational purposes only. The type of assets transferred, the actual date of the gift, and other factors may have a material effect on the amount or use of your deduction. You are advised to seek the advice of your tax advisors before implementing a gift of this type.