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, such as:

Avoid paying capital gains tax on the sale of the real estate

Receive a charitable income tax deduction based on fair market value

Increase your income for retirement with a charitable gift annuity or charitable remainder trust

Complement the unique advantages of your private foundation

Make a greater philanthropic impact

Leave a lasting legacy for you and your family

Types of Real Estate Gifts

While benefits will vary, real estate gift types may include:

Gift Types Benefits
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

“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.”

Heather Chisholm
Fund Advisor at The San Diego Foundation

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.

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

Steven D. Sefton

Chair
President, Endeavor Bank

Elisabeth Eisner Forbes, Esq.

Vice Chair
Attorney at Law, Law Office of Elisabeth Eisner

Mark Stuart, CFRE

Secretary
President & CEO, The San Diego Foundation

James Howell, CFA, CTP

Treasurer
Vice President, Chief Financial Officer, The San Diego Foundation

Mark D. Bitterlin

Founder and President, Bitterlin Companies Inc.

Joseph A. Delaney

Principal, Delaney Real Estate Law

Tim Meissner

Principal, Meissner Jacquét Commercial Real Estate Services

Mark J. Riedy, PhD

Principal, Riedy Advisors

Renee Savage

President, Casavida, AMO

Allan Wasserman

Senior Vice President Senior Commercial Counsel, Fidelity National Title San Diego

Tony Yousif

Director of National Accounts, SVN CompassRock

“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.”

Laura Nichols
Certified Specialist in Estate Planning, Trust & Probate Law
Buchalter Law Offices

Resources

Mike House (pictured center in sunglasses) and his family rely on The San Diego Foundation’s  expertise to help them expand their philanthropy.

MIKE HOUSE’S REAL ESTATE IS THE GIFT THAT KEEPS ON GIVING

Learn how Foundation donor Mike House makes a greater philanthropic impact by maximizing his gifts of real estate....

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How to Gift Real Estate

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Donating Non-Cash Assets to Invest in Your Community

How to Avoid Capital Gains Tax & Invest in Your Community

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How The San Diego Foundation Can Help

Since 1975, The San Diego Foundation has helped passionate, socially minded citizens find ways to create positive impacts in communities across San Diego.

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 our Director, Gift Planning Advisor Leslie S. Klein, CFP®, AEP® at lesliek@sdfoundation.org or (619) 814-1353.