If you own a valuable home in a desirable neighborhood, you may want to donate that house to charity yet continue to live in the house. To do so, you’d contribute a "retained life estate" to your favored cause.
With this strategy, you’d sign over the deed to the house while keeping the right to live there, for yourself and perhaps your spouse. Not only do you retain the right to live there, you retain the responsibility for maintaining the house and paying the bills related to home ownership.
At your death (or the death of your spouse), the charity can sell the house and keep the sale proceeds. Even though such a payoff might be far in the future, you can claim a charitable tax deduction right away. In essence, the present value of the future donation will be calculated and you get to deduct that value in the year of the agreement. Tax code restrictions might limit your first-year deduction but any unused deductions may be taken over the next five years.
