Charitable donations of real estate can make a win-win situation
For many, the hassle of selling expendable property is far eclipsed by the luxury of just ignoring it. But rather than continue to pay taxes on property you don’t use, there is another option: Donating it to the common weal.
Real estate donations to charity are fast, easy and yield highly beneficial tax results. Not only do you avoid any headaches in selling property, but the charity of your choice will directly benefit from the proceeds. It may be the definition of a win-win situation.
Of the approximate $215 billion that Americans gave to charities last year, real estate donations comprised roughly $8 billion, or nearly three percent, and are dramatically on the rise. (Real estate donations in previous years were between $2 billion and $4 billion.) According to Forbes magazine, the reason for their newfound popularity is that most people’s stock portfolios are down, and everyone wants to hold on to their cash: It’s one of the last appreciated assets a philanthropic donor can give.
The greatest advantage of real estate philanthropy, especially in the case of land donation, is that the size of the donor’s tax deduction is determined by the current market value of the property, as opposed to the cost when it was purchased. For example, assume your crazy Uncle Floyd bequeathed you the mountain cabin he bought years ago for $25,000 and, mercy be, it’s appraised at $150,000 today. You, as the ecstatic donor, get a deduction of $150,000, and Uncle Floyd doesn’t seem quite so creepy after all.
Sometimes, a gift of real estate can even provide regular income through an annuity. By creating a "life estate," the owner may be able to continue to live in or otherwise use the property, rent free, even after it’s donated. The Donate Real Estate To Charity Foundation is a great place to begin your research, and can be especially helpful regarding those tricky capital gains tax issues.
A life estate makes a particularly attractive option for large trophy properties, in cases where heirs are unable to afford spiraling property taxes and ongoing maintenance costs, not to mention legal fees, brokerage fees, and estate and inheritance taxes. By donating real estate to charity, even if one’s family is no longer able to enjoy a home, they can at least keep more of what, over time, is more beneficial: cold hard cash.
All online real estate donation programs take special pride in making the giving process as painless and hassle-free for you, the giver, as possible, even providing the necessary paperwork for your IRS tax deduction. And should you be on the fence regarding exactly which charity might best benefit from your philanthropic largess, then DonateCarUSA.com is an excellent resource. They provide a full, alphabetical listing to select from: Everything from the Animal Protection & Rescue League to the Marin AIDS Project to Zero Breast Cancer. Your benevolence can know no bounds.
For more information, visit the following Web sites:
This article appeared in the Dallas Voice Defining Homes print edition March 7, 2008