Learn how your clients can use real estate donations to provide significant tax savings while satisfying their charitable goals.
The simplest and most common method of donating real estate. The deed or title is transferred from the donor to the charity. A donor will then receive a tax deduction equal to the fair market value of the property and that deduction may be carried forward for up to five years.
When the donor sells the property for less than its fair market value to a charity. The difference between the fair market value and the sale price is then considered a donation.1 This allows the donor to recoup funds and receive a tax deduction for the donated portion, a win-win scenario for the donor and the charity.
Qualify for a deduction equivalent to the lesser of the property’s fair market value or its cost basis.
Qualify for a deduction for the fair market value of the property, generally limited to 30% of the donor’s AGI.5
Donors may carry forward a real estate deduction for up to five years.6
|Form of Donation||Amount Deductible||Maximum Deduction as % of AGI|
|Outright Gift of Appreciated Property|
|Long-term asset||1. 100% of fair market value or 2. by election, cost basis||1. 30%, 2. 50%|
|Short-term asset||Cost basis||50%/30% rule|
|Bargain Sale of Appreciated Property|
|Long-term asset||100% of difference of FMV and sales price, appreciation partly taxed||30%|
|Short-term asset||None, if sold at basis|
For real estate worth more than $5000