How Can I Make a Charitable Gift of Real Estate?

Donating real estate to charity can be a meaningful way to support causes you care about while also receiving tax benefits. Whether you own a primary residence, a vacation home, or an investment property, there are several options available for making a charitable gift of real estate.

1. Outright Gift:

An outright gift of real estate is a simple and straightforward way to make a charitable donation. You transfer ownership of the property to the charity, and they receive the full value of the property as a gift. You can claim a charitable deduction on your tax return for the fair market value of the property at the time of the gift.

2. Bargain Sale:

In a bargain sale, you sell your property to a charity for less than its fair market value. The difference between the sale price and the fair market value is considered a charitable donation, and you can claim a tax deduction for that amount. Bargain sales can be beneficial if you want to receive some proceeds from the sale while also making a charitable gift.

3. Charitable Remainder Trust:

A charitable remainder trust (CRT) is a type of irrevocable trust that allows you to retain ownership of your property during your lifetime. You transfer ownership of the property to the trust, and the charity receives the property after your death. During your lifetime, you receive income from the property, and you can claim a charitable deduction for the present value of the remainder interest that will pass to the charity.

4. Charitable Lead Trust:

A charitable lead trust (CLT) is the opposite of a CRT. With a CLT, you transfer ownership of your property to the trust, and the charity receives income from the property for a specified period. After the specified period, the property reverts to you or your heirs. You can claim a charitable deduction for the present value of the income interest that will be paid to the charity.

5. Conservation Easement:

A conservation easement is a legal agreement that permanently restricts the use of your property in order to protect its natural or historical features. You can donate a conservation easement to a qualified charity, and you can claim a charitable deduction for the value of the easement. Conservation easements can be beneficial if you own property with significant environmental or historical value.

6. Life Estate:

A life estate allows you to retain the right to live in your property for your lifetime while transferring ownership of the property to a charity. The charity receives the property after your death. You can claim a charitable deduction for the present value of the remainder interest that will pass to the charity.

7. Pooled Income Fund:

A pooled income fund is a type of charitable trust that combines the assets of multiple donors. You transfer ownership of your property to the fund, and you receive income from the fund for your lifetime. After your death, the remaining assets in the fund are distributed to the charity.

Before making a charitable gift of real estate, it's important to consult with a qualified tax advisor to determine the best option for your specific situation. They can help you understand the tax implications of each type of gift and choose the option that will maximize your charitable deduction and meet your financial goals.