Here is a list of the questions we are most frequently asked about real estate donation. If you have a question or questions not answered here, please call or use our contact form to let us know what’s on your mind.
Q1. What are the benefits of real estate donation for the donor?
Ans. Donating real estate to charities – as well as securities, art, jewelry and other valuables – is not uncommon.
The two primary benefits are:
1) to receive tax relief (for example, to avoid significant capital gains tax) and
2) you are in a position to donate for purely philanthropic reasons and, perhaps, even have a passion for a particular cause.
There are many other good reasons to donate property, many of which are discussed in the following list of frequently asked questions. We encourage you to browse the entire list of FAQs to better understand the process as well as contacting your tax adviser or accountant to determine if a donation of this nature will benefit you and a cause that you support.
Q2. Can I donate my house to charity if it needs repairs?
Ans. Yes, you can still donate your house even if it’s in less than ideal condition.
Q3. Can I donate my house to charity if it is encumbered by a lien?
Ans. Decisions of this nature are determined on a case by case basis. Although less desirable than properties with a clean title, we will still consider such properties. The more information we receive from you, including the appraised value of the property and specifics of current liens will help us make our determination.
Q4. How do I donate real estate?
Ans. We have streamlined the real estate donation process to make it as simple for our donors as possible. You can fill out our brief form and we will contact you, or you can submit the entire donation form. After we receive the property’s appraisal, PCCA will do a property review, including a title, tax and lien search and a review for environmental issues. In select cases, PCCA may be able to satisfy the lien on the property. PCCA reserves the right not to accept the donation during the property review. If the donation is accepted, PCCA will provide a written commitment to accept ownership of the property and will handle all the paperwork and technical aspects of the donation, such as deed transfer and closing. The donor is not required to be present at closing.
Q5. When can I claim my tax deduction?
Ans. You can claim a tax deduction in the year that the property is donated. If IRS guidelines limit your write-off in the year of the gift, the excess deduction may be carried over to the following year.
Q6. How do I claim my deduction? Is it a difficult process?
Ans. Your tax attorney and/or tax preparer will be able to help you, especially to determine the benefit of your donation to your overall tax liability. However, along with the paperwork that we will send you if your noncash contribution is more than $500 you will need to fill out Federal Form 8283 and attach it to your return.
• If you claim a deduction for a contribution of noncash property worth $5,000 or less, you must fill out Form 8283, Section A.
• If you claim a deduction for a contribution of noncash property worth more than $5,000, you will need a qualified appraisal of the noncash property and must fill out Form 8283, Section B.
• If you claim a deduction for a contribution of noncash property worth more than $500,000, you will also need to attach the qualified appraisal to your return.
Q7. How much of the donation can I claim for a tax deduction?
Ans. We do not and cannot offer specific tax advice. Your tax advisor/lawyer would be a good source for that information. As a general rule, you will not receive from PCCA any gift in kind and thus, in accordance with federal and state law, you may be able to claim the maximum allowed in your circumstance.
Note: If you have owned the property more than one full year, you may be able to deduct its full fair market value (including its highest or best use valuation) and escape income tax on the appreciation. However, for property held for less than one full year, the IRS may allow you to claim only a deduction on the price you paid for it.
Q8. What about farmers and ranchers? Is there a different standard?
Ans. Farmers and ranchers may benefit from a 100% limit for qualified conservation contribution (QCCs). If you are a qualified farmer or rancher, your deduction for a QCC is limited to 100% (rather than 50%) of your adjusted gross income minus your deduction for all other charitable contributions. To benefit from this maximized benefit, however, if the donated property is used in agriculture or livestock production (or is available for such production), the contribution must be subject to a restriction that the property remains available for such production. If not, the limit is 50%.
Q9. What is a qualified farmer or rancher?
Ans. You are a qualified farmer or rancher if your gross income from the trade or business of farming is more than 50% of your gross income for the year.
Q10. Where can I read more about the rules governing charitable donations?
Ans. You can find a wealth of information on the IRS Website, especially in their publication #526.
Q11. How do I establish the fair market value of my property?
Ans. The fair market value of your property is determined by the appraisal of a qualified third-party appraiser.
Q12. Do you accept environmentally contaminated property?
Ans. We do not accept contaminated properties. All issues of this nature must be mitigated prior to transfer of title or deed.
Q13. What costs can I expect to incur during the donation process?
Ans. Foremost will be the owner’s responsibility to obtain an appraisal in order to determine the fair market value of your property by a qualified third-party appraiser. Responsibility for real estate transaction costs (e.g., escrow fees, broker fees, etc.) will be determined and agreed to in advance.
PCCA shall have the responsibility to conduct the title search, obtain title insurance, obtain its own property assessment, perform a Phase I EA (if necessary), and other investigations of its choosing.
Note: During the donation process, the donor is still responsible for all of the regular costs associated with the property until acquisition of the property by PCCA has been finalized. This may include but is not be limited to all taxes, bills, mortgages, and property maintenance.
In the event of financial hardship, we will meet with a donor to determine if PCCA can offer some level of relief during the donation process.