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Tax Benefits of Donating Real Estate *

Real Estate Donations from Individuals

The following rules apply if the Donated property is owned in your own name, with your spouse or other persons:

If you have held the property for more than one year, it is classified as long term capital gain property. You can deduct the full fair market value of the donating property. Your charitable contribution deduction is limited to thirty percent (30.00%) of your adjusted gross income.

Excess contribution value may be carried forward for up to five years. If the property has been depreciated, the fair market value must be reduced by its accumulated depreciation through the date of contribution. Fair market value is most commonly determined by an independent appraisal.

If you elect to deduct your cost basis of the donated property you are allowed a deduction of fifty percent (50.00%) of your adjusted gross income. Excesses here again can be carried forward up to five years. Which method you elect is dependent on the cost basis in the property donated, your tax bracket, the age and health of the donor and whether you plan to make future contributions.

 

Corporate Donors of Real Estate

If your contribution is made by corporation, these rules apply:

If you have a controlling interest in the corporation and the property has been held for more than one year, the corporation can deduct up to ten percent (10.00%) of the net profit of the corporation.

Excess contribution amounts can be carried forward up to five years. The fair market value here must be reduced by the amount of accumulate depreciated.

If the corporation has elected “Subchapter S” status, then the contribution allowed will be reported on the individual shareholders K1 and may be deducted on the individual return.

 

Partnerships, S-Corporations, and Limited Liabiliy Companies

The following rules apply if your contribution is being made by a partnership, S-Corporation or limited liability company:

The corporation may not claim a deduction for the property donated. Rather, the contribution passes to the individual shareholders on a proration based on their percent ownership in the S corporation. The shareholder can claim this deduction on their individual tax return. The same limits and carry forward rules will apply.

Partnerships and limited liability company contribution rules are the same as an S corporation with one exception the partners or member can claim a deduction even if they have no basis in the partnership or limited liability company.

* Please consult your CPA/Attorney for your specific tax benefit.

 

IRS 8282 Form: Donee Information Return link

IRS 8283 Form: Noncash Charitable Contributions link

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