To donate property to charity for a tax deduction, transfer the deed to a qualified 501(c)(3) organization that has agreed to accept the gift, obtain a qualified appraisal within the IRS timing window, and file Form 8283 with your tax return along with a written acknowledgment from the charity. If you have owned the property for more than a year, you can generally deduct its full fair market value, up to 30% of your adjusted gross income, and carry any excess forward for five years.1Office of the Law Revision Counsel. 26 USC 170 – Charitable, Etc., Contributions and Gifts Get any step wrong and the IRS can disallow the deduction entirely.
Confirm the Charity Qualifies and Will Take the Property
Your donation only produces a deduction if the recipient is a qualified organization under Internal Revenue Code Section 170(c).1Office of the Law Revision Counsel. 26 USC 170 – Charitable, Etc., Contributions and Gifts That covers most 501(c)(3) groups: religious organizations, schools, hospitals, scientific research groups, and similar entities. Check the recipient using the IRS Tax Exempt Organization Search at irs.gov before you promise anything.
Then there is the harder problem: many charities won’t accept real estate. Property carries management burdens, potential environmental liability, and no guarantee it can be sold quickly. Charities that do accept real estate usually have gift acceptance policies requiring environmental assessments, title searches, and minimum property values before they will sign for a deed. Start the conversation early. The due diligence process can take months.
Almost any real estate qualifies for donation: single-family homes, condos, commercial buildings, vacant land, farmland, and rentals. You can also donate a partial interest in limited circumstances. Federal tax law generally bars deductions for partial-interest gifts, but there are exceptions for a remainder interest in a personal residence or farm (you keep living there for life, the charity owns it after your death), an undivided fractional interest, and a qualified conservation easement.1Office of the Law Revision Counsel. 26 USC 170 – Charitable, Etc., Contributions and Gifts
How Much You Can Deduct
For property you have owned more than one year, you deduct its current fair market value: the price a willing buyer and willing seller would agree on with neither under pressure to close.2Internal Revenue Service. Publication 561 – Determining the Value of Donated Property Your appraiser establishes that figure.
If you held the property for a year or less, the deduction drops to your cost basis, which is generally what you paid plus capital improvements. The statute achieves this by reducing the deduction by any gain that would not have been long-term capital gain had you sold at fair market value.3Office of the Law Revision Counsel. 26 USC 170 – Charitable, Etc., Contributions and Gifts
The 30% AGI Cap and Five-Year Carryforward
Your deduction for long-term appreciated property given to a public charity can’t exceed 30% of your adjusted gross income for the year.1Office of the Law Revision Counsel. 26 USC 170 – Charitable, Etc., Contributions and Gifts If the appraised value exceeds that ceiling, the unused portion carries forward for the next five tax years, subject to the same percentage limit each year.3Office of the Law Revision Counsel. 26 USC 170 – Charitable, Etc., Contributions and Gifts
There’s an election worth knowing about. You can choose to deduct only your cost basis instead of fair market value, and doing so raises the annual ceiling from 30% to 50% of AGI.4Internal Revenue Service. Publication 526 – Charitable Contributions The trade-off can pay off when your income is modest relative to the property’s appreciation and you would rather use the deduction now than stretch it over six years. Run the numbers both ways before you file.
Getting the Appraisal Right
Any donated property with a claimed deduction over $5,000 requires a qualified appraisal. If the deduction exceeds $500,000, the full appraisal report must be attached to your return.5Internal Revenue Service. Instructions for Form 8283 – Noncash Charitable Contributions Missing the appraisal can cost you the entire deduction.
Timing is strict. The appraiser must sign and date the appraisal no earlier than 60 days before the donation date and no later than the due date, including extensions, of the return on which you first claim the deduction.6eCFR. 26 CFR 1.170A-17 – Qualified Appraisal and Qualified Appraiser An appraisal done too early counts as no appraisal at all.
The appraiser has to follow the Uniform Standards of Professional Appraisal Practice and either hold a recognized appraiser designation for real property or have at least two years of experience valuing the type of property being donated. They also must regularly prepare appraisals for compensation.5Internal Revenue Service. Instructions for Form 8283 – Noncash Charitable Contributions A friend with real estate experience does not qualify.
File Form 8283 and Keep the Written Acknowledgment
File IRS Form 8283 with your tax return for the year of the donation. When the deduction exceeds $5,000, Section B applies and requires a description of the property, its physical condition, and its location.7Internal Revenue Service. Form 8283 – Noncash Charitable Contributions Your appraiser completes the Declaration of Appraiser, and an authorized official from the charity signs the Donee Acknowledgment in Part V.5Internal Revenue Service. Instructions for Form 8283 – Noncash Charitable Contributions
You also need a written acknowledgment from the charity for any contribution of $250 or more. For real estate, it must describe the property (but not state a value) and say whether the charity gave you any goods or services in exchange.8Internal Revenue Service. Charitable Contributions – Written Acknowledgments You must have it in hand no later than the date you file the return claiming the donation.9Internal Revenue Service. Substantiating Charitable Contributions
Transferring the Deed
The gift is complete when you sign a deed, deliver it to the charity, and the charity accepts. Most transfers use a warranty deed, which guarantees clear title, or a quitclaim deed, which transfers whatever interest you hold without any title guarantee. Charities generally prefer a warranty deed for the added protection.
Have the deed notarized and recorded with the local county recorder’s office. Recording creates the public record that the charity now owns the property and you no longer have any legal interest. Fees vary by jurisdiction and are usually modest. Skipping recording invites title disputes, property tax confusion, and complications when the charity later tries to sell.
Before the transfer closes, expect the charity to run a title search and, for commercial or industrial sites, an environmental assessment. Those steps protect the charity from inheriting liens or contamination liability, and they are usually a precondition of accepting the gift.
Traps That Can Wipe Out the Deduction
Property With a Mortgage
Donating property that still carries a mortgage is treated as a bargain sale. The charity’s assumption of the debt counts as sale proceeds, and you owe capital gains tax on part of the transfer. The IRS allocates your basis between the “sale” portion (the mortgage) and the “gift” portion (the rest) based on the ratio of mortgage balance to fair market value.10Office of the Law Revision Counsel. 26 USC 1011 – Adjusted Basis for Determining Gain or Loss If the mortgage is close to or above your basis, the taxable gain can be substantial. Pay off the loan before donating if you can, or have a tax professional model the numbers first.
Overvaluing the Property
If the value you claim is 150% or more of the correct value, the IRS imposes a 20% accuracy-related penalty on the underpaid tax attributable to the overstatement. Hit 200% or more, and the penalty doubles to 40%.11Office of the Law Revision Counsel. 26 US Code 6662 – Imposition of Accuracy-Related Penalty on Underpayments The penalty comes on top of the disallowed deduction and interest, and the appraiser can be penalized too. An inflated appraisal is not a loophole.
The Charity’s Later Sale
If the charity sells or otherwise disposes of the property within three years, it must file IRS Form 8282 and send you a copy.12Internal Revenue Service. Donee Information Return A sale price well below your claimed value can prompt the IRS to revisit whether the appraisal was inflated.
Conservation Easements as an Alternative
If you want to keep the land but donate its development rights, a conservation easement lets you do that. You permanently restrict how the property can be used, typically to preserve open space, habitat, farmland, or historic character, and deduct the difference between the property’s value with and without the restriction.
The limits are more generous than for outright gifts. A qualified conservation contribution can offset up to 50% of adjusted gross income, with excess carrying forward for 15 years rather than five. Qualified farmers and ranchers can deduct up to 100% of AGI for easements on agricultural property.3Office of the Law Revision Counsel. 26 USC 170 – Charitable, Etc., Contributions and Gifts The IRS scrutinizes these deductions closely, particularly syndicated transactions where investors buy into a partnership mainly to claim inflated write-offs. Get independent legal and tax advice before going this route.