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 The 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.
The example below 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.