Real estate donations make good sense for both individuals and corporate donors. The equity from your real estate donation helps us continue to benefit the many commendable causes we support. MatchingDonors.com is here to provide you with the expertise necessary to conduct a real estate donation that optimizes the benefits for both you, the donor, and those we serve.
Individual donors
These rules may apply if the donated real property is owned in your own name, with your spouse or other persons (Please check with your tax professional).
If you have held the property for more than one year, it is classified as long-term capital gain property.
You can deduct the full fair market value of the donated property. Your charitable contribution deduction is limited to various percentages of your adjusted gross income. Excess contribution value may be carried forward for up to five years. If the property has been depreciated, the fair market value must be reduced by its accumulated depreciation through the date of contribution.
Fair Market Value is most commonly determined by an independent appraisal
If you choose to deduct your cost basis of the donated property you are allowed a deduction of fifty percent (50.00%) of your adjusted gross income (Please check with your tax professional).
Excesses here again can be carried forward up to five years. Which method you choose to follow is dependent on the cost basis in the property donated, your tax bracket, the age and health of the donor and whether you plan to make future contributions (Please check with your tax professional).
Corporate Donors
The following rules apply if your charitable donation of real property is made by a corporation:
If you have held a controlling interest in the corporation and the property has been held for more than one year, the corporation may deduct up to ten percent (10.00%) of the net profit of the corporation (Please check with your tax professional).
Excess contribution amounts can be carried forward up to five years. The fair market value here must be reduced by the amount of accumulate depreciation.
If the corporate has elected "Sub. S" status, then the contribution allowed will be reported on the individual shareholders K1 and may be deducted on the individual return (Please check with your tax professional).
Partnerships, S-Corporations and Limited Liability Companies
The following rules may apply if your contribution is being made by a partnership,
S-Corporation or limited liability company:
The corporation may not claim a deduction for the property donated.
Rather, the contribution passes to the individual shareholders on a pro-rated based on their percent ownership in the S corporation. The shareholder can claim this deduction on their individual tax return. The same limits and carry forward rules will apply (Please check with your tax professional).
Partnerships and limited liability company contribution rules are the same as an S corporation with one exception the partners or member can claim a deduction even if they have no basis in the partnership or limited liability company.
(Please check with your tax professional)
Most importantly, your real estate donation of real property will assist the countless programs of MatchingDonors.com.
Have you inherited a residence? Donate now and bring down estate taxes.
Capital gains taxes draining your bank account? Rid Yourself of a Problem, Donate Property.
Investment property Not Producing? MatchingDonors.com can Help!
Donate Real Estate / First-Rate Tax Deduction / Helps those in Need
Tax Publications and FAQs
Charitable Contributions
Charitable contributions are deductible only if you itemize deductions on Form 1040, Schedule A.
To be deductible, charitable contributions must be made to qualified organizations. Payments to individuals are never deductible. See Publication 526, Charitable Contributions.
Publication 526
Contributions You Can Deduct
Generally, you can deduct your contributions of money or property that you make to, or for the use of, a qualified organization. A gift or contribution is “for the use of” a qualified organization when it is held in a legally enforceable trust for the qualified organization or in a similar legal arrangement.
Property Contributions
If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the property at the time of the contribution. However, if the property has increased in value, you may have to make some adjustments to the amount of your deduction. See Giving Property That Has Increased in Value, later.
Donation Value
Because each piece of real estate is unique and its valuation is complicated, a detailed appraisal by a professional appraiser is necessary.
Fair Market Value
Fair market value (FMV) is the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts. If you put a restriction on the use of property you donate, the FMV must reflect that restriction.
Appraisals
Appraisals are not necessary for items of property for which you claim a deduction of $5,000 or less. (There is one exception, described next, for certain clothing and household items.) However, you generally will need an appraisal for donated property for which you claim a deduction of more than $5,000.
