A qualified appraisal
By a qualified appraiser you choose and pay, made no earlier than 60 days before the gift.
Tax benefits of donating real estate: deduction, capital gains and estate
Talk to a property specialist: (888) 228-7320
Tax Benefits of Donating Real Estate
Donating real estate to a qualified 501(c)(3) charity can produce several tax effects at once: a charitable income tax deduction, no capital gains tax on the appreciation, and a smaller taxable estate. None of them are automatic. Each depends on how long you have held the property, how it was used, whether it carries debt, and your own tax situation. Here is how each one generally works.
Fully IRS Compliant
We Handle the Paperwork
Form 8283 Done Right
501(c)(3) Recognized Charity
The charitable income tax deduction
For real estate held more than a year that is not dealer inventory, the deduction is generally its fair market value, as established by a qualified appraisal. It is limited to 30% of your adjusted gross income for gifts to a public charity, and anything above the limit can be carried forward for up to five years.
The 50% election
You can elect a 50% of AGI limit instead, but the deduction then falls to your cost basis. It can make sense when basis is close to value.
Short-term and ordinary-income property
Property held a year or less, dealer inventory and similar property is generally limited to basis.
You must itemize
The deduction helps only if you itemize and have income to offset.
Capital gains and estate effects
Selling appreciated property triggers capital gains tax on the gain. Donating it does not, because a gift is not a sale. Depreciation taken on rental or business property can reduce the deduction under the rules that apply to that property.
Property you give away during life is out of your taxable estate, and property left to charity at death is generally deductible for estate tax. A mortgage makes any gift a bargain sale, with gain on the debt portion.
The paperwork behind the deduction
The IRS requires all three for a real estate gift over $5,000.
Form 8283, Section B
Signed by the appraiser and acknowledged by us. Over $500,000, the appraisal is attached to your return.
A written acknowledgment
Our contemporaneous written acknowledgment of the gift.
Real estate donation tax questions, answered
How much will my tax deduction be? +
We cannot tell you, and no charity should promise an amount. It depends on the appraised value, your holding period, your AGI, any debt and depreciation, and whether you itemize. Your tax advisor can estimate it.
Is the deduction always fair market value? +
No. Fair market value generally applies to long-term capital gain property. Short-term property, dealer inventory and ordinary-income property are generally limited to basis, and electing the 50% limit also means deducting basis.
What if my deduction is larger than 30% of my income? +
The excess can be carried forward and used over the next five years, subject to the same limit each year.
Do I avoid capital gains tax by donating? +
Generally, yes, on the appreciation, because a gift is not a sale. A mortgage changes that: debt relief is treated as sale proceeds in a bargain sale.
Which IRS form reports a real estate donation? +
Form 8283. Gifts over $5,000 use Section B, with a qualified appraisal signed by the appraiser and acknowledged by the charity.
We do not provide tax or legal advice. See IRS Publication 526, Publication 561 and the Form 8283 instructions, and consult your own advisor.
Related guides
Tell us about the property and we will review it
We will tell you plainly how a donation would work. For the tax numbers, bring in your own advisor.