Spotlight on Giving

How to Make Gifts of Real Estate

Real estate (a home, vacation home, land, commercial property, etc.) is a potentially powerful asset to fund a charitable contribution, yet it is often overlooked. Do you own appreciated property you no longer wish to use or maintain but don’t want to pay the capital gains tax that would result from a sale? Consider the many benefits of making a gift of real estate. 

What are the benefits of an outright gift of real estate? 

When you directly transfer real estate to us, you gain many advantages.

1. Bypass the capital gains tax. This applies to appreciated property you’ve held for longer than one year. In comparison, if you sold the property and then donated the proceeds, you would have to pay the capital gains tax on the sale, which would reduce your charitable impact.
2. Receive a deduction. Your gift qualifies for an income tax charitable deduction based on the fair market value of the donated property. While your deduction is limited to 30% of your adjusted gross income, any excess amount can be carried forward for up to five years.
3. Remove the property from your taxable estate. This reduces the size of your taxable estate for estate tax purposes.
4. Avoid property hassles. By donating your real estate, you can avoid the inconveniences associated with property maintenance and the challenges of selling your property.

Are there other ways to donate real estate?

A charitable gift of real estate can be structured to fit your needs. There are even options that let you generate a lifetime income or retain lifetime use of the property. 

Is a gift of real estate complicated? 

A gift of real estate certainly requires more consideration and effort than many other types of gifts, but keep in mind that it can also meet numerous tax and planning goals. Start by asking yourself three questions:

1. Have I owned the property for one year or more? 
2. Is the mortgage paid off?
3. Is the property free from issues, and does it have a clear title? 

If you answered yes to those questions, you may want to read more about the various options for donating real estate. If you answered no to any of those questions, that doesn’t rule out making a gift, but it does indicate that you should start a conversation with us so we can help you explore the possibilities.