While it’s common for people to donate cash, donate a vehicle, or donate a boat to charitable organizations, it’s not as common to donate a house. But such an action can be done! Homeowners might decide to donate a property to Giving Center for a variety of reasons; however, the donation process for houses can be complicated because it involves different legal aspects and tax implications.
1. Hire a licensed appraiser to determine your property’s fair market value. If there is no mortgage loan balance on the property, the appraised value will be the basis of the donation. If there’s an unpaid loan balance, it is subtracted from the fair market value to determine the equity.
2.Although you have the right to give your property to any charity you wish, you only will be able to deduct the donation if it’s made to a charity recognized by the Internal Revenue Service. Giving Center is an IRS Approved, 501(c)3 not for profit charity organization. Talk with one of their live representatives to get information about donations of property!
3. Contact an attorney to advise you through the donation process. With large donations, such as a house, there are various methods to donate it. You can give the property away outright, leave it in your will, or place it in a trust. The attorney can help you determine which method is best for your situation.
4. Finalize the transaction by signing the necessary documents, such as the deed, will or trust. Obtain copies for your records, and keep them in a safe place. Giving Center will provide you with the tax documents you need!
- You may want to speak with a financial professional regarding the tax consequences and any future income you might earn from the donation of property.
- If you want the house to be used in a specific manner, it can be expressed to the charity. Your lawyer can include your wishes in the transfer documents, like the trust.
- If you currently have a mortgage balance on the property, it complicates the donation. Typically, a form of a bargain sale is used where the charity agrees to accept the house at less than its fair market price. There are further income tax implications regarding this type of transfer versus a donation of a house without a mortgage balance.