Blog

A Fresh Look at Charitable Gifts of Real Estate

Real estate is the largest asset class in the world, yet only a small percentage of charitable giving each year involves property. Many advisors and donors know it is possible to donate real estate, but the process can feel complex, and in some cases can be very emotional. Family homes and land can represent years of memory and make the idea of parting with it difficult for some.

Even so, charitable gifts of real estate deserve renewed attention—especially in today’s environment.

A Changing Landscape of Property Ownership

In the coming years, trillions of dollars are expected to move to the younger generations, creating a huge wealth transfer. Much of that wealth is tied up in real estate, and when ownership changes, families may find that holding onto appreciated property doesn’t fit into their lifestyle or finances.

Vacation homes may sit unused. Rental properties may require more oversight than a family wants to manage. Inherited land may feel more like a responsibility than an opportunity. In these cases, real estate can become illiquid and burdensome.

Charitable planning can be a solution that is both practical and meaningful. When done thoughtfully, gifts of appreciated property are one way to reduce tax exposure and convert unwieldy assets into flexible resources.

Key Tax Benefits of Real Estate Gifts

If a long-term appreciated piece of real estate gets donated to a public charity, the deduction is calculated based on the property’s fair market value, not its purchase price. To qualify for this treatment, the property must typically have been held for more than one year.

In addition, because a community foundation is a public charity, the sale of the property after it is donated does not trigger capital gains tax at the charitable level. That allows the full value of the sale proceeds to support charitable purposes rather than being reduced by taxes.

For clients with highly appreciated property, this can be a powerful way to maximize both tax efficiency and charitable impact.

Partnering with a Community Foundation

Real estate can be contributed to a donor-advised fund or other charitable fund at the Athens Area Community Foundation. Once accepted and sold, the proceeds are placed in the fund and can be distributed over time to support the nonprofits and causes that matter most to the donor.

This approach transforms an illiquid asset into a flexible giving tool. Instead of managing property, the donor can focus on building a lasting philanthropic legacy in the community.

Early communication is important. Before initiating a transfer, advisors and donors should connect with the community foundation to evaluate the property, review options, and confirm that the gift aligns with overall financial and charitable goals.

Practical Considerations

As with any gift of a non-cash asset, careful planning is essential. The property should ideally be free of debt, since mortgages and other encumbrances can complicate the transaction. Donors must obtain a qualified appraisal to establish fair market value and properly complete IRS Form 8283. The transfer must be executed with appropriate legal documentation, including a deed.

Timing also matters. Donors should avoid pre-arranging sales before their charitable transfer, since it can jeopardize the tax benefits.

Although the requirements may seem detailed, the potential rewards are substantial. A well-structured gift of real estate can simplify a client’s portfolio, reduce taxes, and create meaningful community impact.

If you or your clients are considering how real estate might support charitable goals, the Athens Area Community Foundation is here to help. Contact our team to explore whether a property gift could become a powerful tool for lasting good in our community.