A gift of land contribution means transferring ownership of real estate like vacant lots, farms, or commercial buildings to a qualified 501(c)(3) charity or government entity. Instead of monetary donations, donors give physical property, which charities may use for their mission, preserve, or sell to fund programs.
How to Donate Land to Charity
Donating land involves several important steps:
- Identify a Suitable Charity: Not all nonprofits accept land donations due to maintenance or liability concerns. Organizations like land trusts, conservation groups, universities, or local governments are common recipients.
- Due Diligence: Both donor and charity review property title, environmental status, and suitability. The charity confirms its ability to accept the gift.
- Obtain a Qualified Appraisal: For land valued over $5,000, IRS rules require an independent appraisal to determine fair market value for tax deduction purposes (IRS Pub. 526).
- Legal Transfer of Title: The donor executes a deed transferring ownership legally, often with legal assistance to ensure proper recording.
- Tax Filing Documentation: Donors must file IRS Form 8283 for noncash gifts over $500, with Section B required if the land’s value exceeds $5,000. The appraisal report supports the deduction claim.
Tax Benefits and Considerations
Donating appreciated land can avoid capital gains tax and offer a charitable deduction based on the property’s fair market value. However, the deduction is typically limited to 30% of your adjusted gross income for long-term capital gain property given to public charities, with a five-year carryover for unused amounts (IRS Pub. 526).
Be aware of common pitfalls such as:
- Using unqualified appraisals can jeopardize the deduction.
- Environmental contamination can complicate or prevent acceptance.
- Confirming the charity’s tax-exempt status and willingness to accept is essential.
- Encumbered property (liens, mortgages) may disqualify the gift.
Why Donate Land?
Beyond philanthropy, donors benefit from tax advantages and simplified estate planning, possibly avoiding the costs and time involved in selling property.
Related Resources
For details on noncash contributions and IRS forms required, see Form 8283 – Noncash Charitable Contributions and our overview of Charitable Contributions Deduction.
Authoritative Sources
- IRS Publication 526: Charitable Contributions
- IRS Form 8283: Noncash Charitable Contributions
Consult a tax advisor or real estate attorney to navigate the specifics of your land donation and maximize its benefits.