Real Estate Donation Tax Benefits - IRS Tax
Deduction Donated Property
A Real estate donation, whether vacant
land, industrial, residential,
land contracts, commercial property
or timeshare, provides you with a great way to
enjoy what many consider an impressive tax
deduction. If your real property asset has
grown in value, or unfortunately turned into
a non-producing property in your
portfolio, it may be the time to consider a
real estate donation . Real estate donations
make good sense for both
individuals and
corporate donors. The equity from
your real estate donation helps continue to
benefit many commendable causes.
What Can A Real
Estate Tax Deduction Do For You?
Individual donors
These rules may apply if the donated real
property is owned in your own name, with your
spouse or other persons (Please check with your
tax professional):
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 donated property.
Your charitable contribution deduction is
limited to various percentages 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 choose to deduct your cost basis of the
donated property you are allowed a deduction of
fifty percent (50.00%) of your adjusted gross
income (Please check with your tax
professional).
Excesses here again can be carried forward up to
five years. Which method you choose to follow 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 (Please check with your tax
professional).
Corporate
Donors
The following rules apply if your charitable
donation of real property is made by a
corporation:
If you have held a controlling interest in the
corporation and the property has been held for
more than one year, the corporation may deduct
up to ten percent (10.00%) of the net profit of
the corporation (Please check with your tax
professional).
Excess contribution amounts can be carried
forward up to five years. The fair market value
here must be reduced by the amount of accumulate
depreciation.
If the corporate has elected "Sub. S" status,
then the contribution allowed will be reported
on the individual shareholders K1 and may be
deducted on the individual return (Please check
with your tax professional).
Partnerships,
S-Corporations and Limited Liability Companies
The following rules may 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 pro-rated 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 (Please check
with your tax professional).
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 check with your tax professional)
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