May 29, 2018

Donate Real Estate

Donating real estate to charity

How to increase your gift to charity by donating real estate directly.

How does it work?

CREATE Audio Art Foundation is a 501(c)(3) public charity. When you make a contribution of real estate to C.A.A.F., you won’t have capital gains exposure because you’re gifting—not selling—the property; this means your charitable gift, and your tax deduction as well, may be over 20% higher.2

This assumes all realized gains are subject to the maximum federal long-term capital gains tax rate of 20% and the Medicare surtax of 3.8%, and that the donor originally planned to sell the property and contribute the net proceeds (less the capital gains tax and Medicare surtax) to charity.


A closer look: Put your property to good use

Mike, a recently retired CEO of a publicly traded company, was ready to downsize. His financial advisor suggested an interesting option that would not only simplify his lifestyle but also help fund Mike’s passion to support charities focused on issues related to youth and the arts during his retirement. Mike had purchased a house at the beach years ago, and it had turned out to be a very good investment. Over time, it had appreciated, and Mike’s financial advisor suggested that he use the house to provide funds for his philanthropic plans, especially since his income in retirement would be reduced.

Instead of selling the house, now valued at $1.5 million, and contributing the proceeds in cash, Mike’s advisor suggested a better way: by contributing the asset to C.A.A.F., Mike would be able to take a tax deduction of the fair market value of the house, based on a qualified appraisal, and eliminate his capital gains tax on the appreciation.

Considerations for donating real estate:

  • While the charity will consider investment property with an income stream, the charity’s due diligence process for investment property is considerably more involved.
  • The property generally must be debt-free.
  • The individual must be willing to irrevocably transfer the property to the charity, which will exclusively control the sale, including negotiating the sale price.

Potential benefits of giving real estate directly to CREATE Audio Art Foundation:

  • Make a larger charitable contribution
  • Eliminate capital gains tax exposure
  • Take a fair market value tax deduction

This hypothetical case study is provided for illustrative purposes only. It does not represent an actual donor, but is meant to provide an example of how a donor-advised fund can help individuals give significantly more for the causes they care about.

Give us some information on the property you would like to donate and we will contact you shortly.