How To: Donate Real Estate to a Nonprofit

For some, donating a home is the ultimate in charitable giving, a single act that can enhance the lives of whole families and create ripples for generations yet unborn. If you are thinking about making such a significant donation, it is important to do it the right way. With such a big gift, making the most of the donation is a vital consideration, and there are many things to think about.

Donating a house is a bit more complex than other types of donations, but it doesn’t need to be daunting. Here are the steps to ensure you have a smooth home donation process:

  1. Talk with your donor organization. To take a tax deduction from donating a house, it would need to go to a 501(c)(3) organization, like Giving Center. In fact, they are an IRS approved 501(c)3 nonprofit charity organization. Once you confirm your organization’s status, ask if it would like a home donation. Some organizations will be thrilled to receive your home donation. For other organizations, though, a home donation may not be a good fit due to the cost involved in maintaining or selling the home. Giving Center is prepared to handle various types of charitable real estate donations including but not limited to: donate home, donate landdonate commercial propertydonate industrial propertydonate rental property, or donate land contracts. 
  2. Get a professional appraisal. “You want an appraisal in order to give credence to the value of the home you would be giving,” says James G. Aaron, attorney and partner at Ansell Grimm & Aaron in Ocean, NJ. “You’re going to want to take [the donation] as a tax deduction, and you want it to pass muster with the IRS.” Although you can look up your property value online or through your local municipality, a professional appraisal may give you a higher value and lends your appraisal more weight if your donation comes under scrutiny. Your donor organization may require a professional appraisal as well.
  3. Talk to your advisers. A tax adviser can guide you regarding the potential tax benefits of your deduction. Taking an estimate of the fair market value, a record of your purchase date and the original cost of the property, and the amount you’ve spent on capital improvements to your adviser meeting.
  4. Pay off your mortgage. If you haven’t already, consider paying off your mortgage. This simplifies the donation process immensely and keeps the receiving organization from having to pay unrelated business income tax if they sell the property. In general, it’s best for all parties involved to donate a home with a clear mortgage, but if this isn’t possible or realistic, talk to your advisers and the donor organization to find out the best path for proceeding with the donation.
  5. Sign over the property and get a receipt. Once everyone is on the same page, proceed with the property transfer. Coordinate with Giving Center regarding utilities and any belongings that need to be removed from the home. Be sure to get documentation of your transaction from the donor organization.

If you’re interested in donating real estate to charity, please visit our website: http://www.realestatewithcauses.org for more information You can also speak to a live representative at 888-228-7320. 

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