A Real Estate Donation, whether vacant land, industrial, residential, land contracts, commercial property or timeshare, provides you with a great way to enjoy what many consider an impressive tax deduction. If your real property asset has grown in value, or unfortunately turned into a nonproducing property in your portfolio, it may be the time to consider a real estate donation.
Real estate donations make good sense for both individuals and corporate donors. The equity from your real estate donation helps us continue to benefit the many commendable causes we support. Real Estate with Causes is here to provide you with the know-how necessary to conduct a real estate donation that optimizes the benefits for both you, the donor, and those we serve.
These rules may apply if the donated real property is owned in your own name, with your spouse or other persons (Please check with your tax professional):
If you have held the property for more than one year, it is classified as long-term capital gain property. You can deduct the full fair market value of the donated property. Your charitable contribution deduction is limited to various percentages of your adjusted gross income. Excess contribution value may be carried forward for up to five years. If the property has been depreciated, the fair market value must be reduced by its accumulated depreciation through the date of contribution.
Fair Market Value is most commonly determined by an independent appraisal. If you choose to deduct your cost basis of the donated property you are allowed a deduction of fifty percent (50.00%) of your adjusted gross income (Please check with your tax professional). Excesses here again can be carried forward up to five years. Which method you choose to follow is dependent on the cost basis in the property donated, your tax bracket, the age and health of the donor and whether you plan to make future contributions (Please check with your tax professional).
The following rules apply if your charitable donation of real property is made by a corporation:
If you have held a controlling interest in the corporation and the property has been held for more than one year, the corporation may deduct up to ten percent (10.00%) of the net profit of the corporation (Please check with your tax professional). Excess contribution amounts can be carried forward up to five years. The fair market value here must be reduced by the amount of accumulate depreciation.
If the corporate has elected "Sub. S" status, then the contribution allowed will be reported on the individual shareholders K1 and may be deducted on the individual return (Please check with your tax professional).
Partnerships, S-Corporations and Limited Liability Companies.
The following rules may apply if your contribution is being made by a partnership, S-Corporation or limited liability company:
The corporation may not claim a deduction for the property donated. Rather, the contribution passes to the individual shareholders on a pro-rated based on their percent ownership in the S corporation. The shareholder can claim this deduction on their individual tax return. The same limits and carry forward rules will apply (Please check with your tax professional).
Partnerships and limited liability company contribution rules are the same as an S corporation with one exception the partners or member can claim a deduction even if they have no basis in the partnership or limited liability company. (Please check with your tax professional)
Have you inherited a residence? Donate now and bring down estate taxes. Capital gains taxes draining your bank account? Rid Yourself of a Problem, Donate Property. Investment property Not Producing? Donate Real Estate / First-Rate Tax Deduction / Helps those in Need