Benefits of Donating Real Estate
Real estate represents the largest asset class in the United States, yet only 3 percent of total charitable giving comes from such gifts.
Real estate is often overlooked as a powerful charitable giving asset due to its size, sophistication and complexity.
However, donating appreciated land or real estate, such as a home, vacation property, undeveloped land, farmland, ranch or commercial property, to a 501(c)3 public charity or donor-advised fund can provide significant benefits.
- Avoiding capital gains tax on the sale of the real estate
- Receiving a charitable income tax deduction based on fair market value
- Increasing your income for retirement with a charitable gift annuity or charitable remainder trust
- Complementing the unique advantages of your private foundation
- Making a greater philanthropic impact
- Leaving a lasting legacy for you and your family
|Outright gift to organization||Charitable deduction and tax savings|
|Charitable remainder trust||Income, charitable deduction and tax savings|
|Charitable gift annuity||Guaranteed fixed payments, charitable deduction and tax savings|
|Bargain sale||Cash, charitable deduction and tax savings|
How to Give a Gift of Real Estate
You or your client can donate long-term real estate (held more than one year) to a donor-advised fund by executing or signing a deed transferring ownership to the charitable sponsor of the fund, such as San Diego Foundation. You may deed part or all of your real property.
The gift will generally be based on the property’s fair market value, which must be established by an independent appraisal.
You or your client will be eligible for an immediate federal tax deduction equal to the fair market value of the property donated, up to 30 percent of adjusted gross income (AGI).
If the fair market value of the donation is greater than 30 percent of AGI, the excess can be carried forward for five years.
By donating directly to a donor-advised fund, you will eliminate capital gains tax and have additional money to grant. The initial contribution grows tax-free and is invested to maximize return and strengthen grantmaking and social good power.
Through the fund, you or your client can recommend grants to support causes you care about and nonprofit organizations over time.
This example illustrates the capital gains and tax savings benefits for a donor who gifts his property valued at $1 million directly to charity (Option 2), rather than selling his property and donating the after-tax proceeds (Option 1).
This hypothetical example does not take into account state or local taxes or the Medicare net investment income surtax. The tax savings shown is the tax deduction, multiplied by the donor’s income tax rate (24% in this example), minus the long-term capital gains taxes paid.
“When I was ready to sell my rental property on Park Boulevard, The Foundation helped me set up my real estate donation as a charitable gift annuity so I could increase my income during retirement. It brings me great delight that The Foundation will receive the balance of my gift after my passing.”
SDF Fund Advisor
“My client received great joy well beyond the charitable deduction by getting to personally know his beneficiaries during his lifetime. The remainder of his real estate gift contributed to his legacy fund, which continues to support his and his partner’s beloved charities.”
Certified Specialist in Estate Planning, Trust & Probate Law
Buchalter Law Offices
Turn Your Real Estate Asset into Impact
The San Diego Foundation Charitable Real Estate Foundation (CREF) Board is our team of industry leaders that recognizes the growing importance of real estate gifts in estate and tax planning as well as personal and family philanthropy.
Our CREF Board acts in an advisory role to our staff.
The board provides oversight and guidance for our Giving Team, as we help donors and professional advisors tap into the substantial benefits of donating real estate assets and give a timely, accurate indication of the potential gift value of the property.
CREF Board Members
Mike House's Real Estate is the Gift That Keeps on Giving
How to Gift Real Estate
How to Avoid Capital Gains Tax & Invest in Your Community
Contact Our Team
If you or your client are interested in learning more about the benefits of gifting real estate to charity or a donor-advised fund, contact Director, Gift Planning Advisor Leslie S. Klein, CFP®, AEP® at (619) 814-1353, email us or submit a Contact Form.