Donating Real Estate
Can I really donate real estate?
Yes. IRS rules have allowed for the donation of real estate to charitable organizations since 1917! This is a great way to support your favorite charity and create a legacy for you and your family.
Can I donate to any not-for-profit?
There are some restrictions with who can receive funds from a charitable donation, but with our program, you can choose almost any not-for-profit organization.
Is this for residential property only?
Titled property of almost any type qualifies for donation. This includes residential, commercial, raw land and more. (Time shares do not qualify.)
Do i have to donate the whole property?
No. You can elect to donate some or all of the proceeds from the sale of your property. This becomes a two step transaction comprising a cash sale for a portion of a property’s Fair Market Value and a charitable donation for the difference. The funds that you do not donate can be used any way you wish. Tax benefits are only extended to donated portions of the gift.
In some commercial property situations, you can retain a portion of the asset while making a sizable donation to your favorite charity.
What are the benefits of donating real estate?
Tax Benefits
Gifts of appreciated real estate avoid capital gain taxes, and entitle you to a deduction against your taxable income, based on your property’s current appraised value.
Simplification
Gifts of complex assets allow you to retain liquid assets for your lifestyle, and simplify transfers of wealth to the next generation.
Family Philanthropy
Repurposing a property you no longer use by converting it to a charitable gift, can fund a “giving account” that grows tax free, and serves as the source of cash grants you and your family can make over generations.
Partial Cash Payments
A donation of real estate can be split into a cash portion for debt payoff or a donor’s personal needs, and a gift portion to support the donor’s favorite nonprofits.
How much will my charity receive?
In a typical transaction, your chosen charity will receive 90% to 99% of the net proceeds. All fees associated with the transaction including repairs, holding costs, closing costs and commissions will be paid from the proceeds of the sale of the property prior to calculating the final payout. The intermediary retains $20,000 (minimum) to $30,000 (typically) as its share of the net charitable funds. Since it is a not-for-profit itself, this portion of the donation is tax deductible.
How does the process work?
1. Set up a consultation to determine if your property and charity are a good fit. We'll discuss your wishes for the property and how you would like to fund your charity.
2. With the basic information at hand, you will receive an initial Net Gift Estimate to summarize the likely outcome of the gift, using values assumed in the preliminary discussions.
3. Sign an agreement to sell the property to an intermediary who will handle the transaction.
4. Obtain an appraisal
5. Transfer the property deed to the intermediary. The gift will be complete, and you will receive all documentation (including IRS Form 8283) for your tax file. All closing costs and prorations are funded by the intermediary.
6. After accepting the gift, we will undertake repairs, remediation, and marketing the property for sale. The intermediary will fund repair and holding costs during the donation process.
7. Upon the sale of the property, the net proceeds will be distributed among all the nonprofit(s) benefiting from the “net charitable funds”.
What about creating a scholarship fund?
Many donors would like to leave a legacy well beyond their years. One option available is to create a Donor Advised Fund that allows you and your heirs to donate money on an ongoing basis.
Want to know more?
Set up a free, no-obligation, discussion about how you can fund your passion through a gift of real estate.