Gifting Real Estate to Charity: Steps, Taxes, and Timing

Why people donate real estate

Donating real estate can deliver a larger charitable impact than a cash gift and, in many cases, an attractive tax outcome. When structured correctly, a gift of appreciated real property lets the donor avoid capital gains that would occur on a sale and claim a charitable deduction for the property’s fair market value (subject to IRS limits). That said, real estate gifts are more complex than cash gifts and require appraisal, documentation, and due diligence by both donor and donee.

Authoritative sources: IRS Publication 526 (Charitable Contributions) and IRS guidance on Form 8283 explain valuation and substantiation requirements for noncash gifts. See also IRS details at https://www.irs.gov/charities-non-profits/income-tax-deductions-for-charitable-contributions and the Form 8283 page (about Form 8283) for filing rules.

Step-by-step timeline: how to give real estate to charity

1. Decide what to donate and confirm the charity’s acceptance policy

• Not every nonprofit accepts real property. Confirm the organization is a qualified 501(c)(3) and that it has a policy for accepting real estate (many smaller charities decline due to maintenance, legal, or environmental concerns). Use GuideStar or the charity’s IRS determination letter to verify status.

1. Preliminary due diligence (2–6 weeks)

• Title search: ensure clear title and identify liens, mortgages, or easements. Outstanding mortgages usually reduce the deductible amount and can complicate the transfer (see “mortgage-encumbered property” below).
• Environmental review: charities often require a Phase I environmental assessment for commercial, agricultural, or older residential properties to limit future liability.
• Market review: get a broker market analysis to confirm the property is marketable.

1. Get a qualified appraisal (2–8 weeks)

• If you claim more than $5,000 for a noncash gift, the IRS requires you to complete Form 8283. For contributions of property that exceed $5,000, you generally need a qualified appraisal (IRS Pub. 561 and Form 8283 instructions). Use a licensed appraiser experienced with the property type. Keep the appraisal and all supporting records.

1. Negotiate terms with the charity

• Decide whether the charity will use the property or sell it. If the charity will use the property in its exempt purpose, the deduction rules can differ from gifts the charity sells.
• Consider alternatives if the charity cannot accept the asset (see “Alternatives” below).

1. Prepare transfer documents and complete the deed (1–4 weeks)

• Work with an attorney to prepare a warranty deed or quitclaim deed as required by state law. Record the deed with the county recorder’s office. The gift date is generally the date the deed is delivered and accepted by the charity.

1. Complete tax substantiation and reporting (tax year of the gift)

• Fill out Form 8283 (Noncash Charitable Contributions). Section A covers gifts up to $5,000; Section B is for items over $5,000 and often requires additional signatures and appraisal information.
• Itemize on Schedule A of Form 1040 to claim the deduction, subject to AGI limitations and carryover rules.

1. Follow up

• Get a contemporaneous written acknowledgement from the charity describing the gift and any goods or services received. Keep the appraisal, title documents, deed, and correspondence for at least three years (longer if the deduction is substantial).

Key tax rules and limits (practical summary)

• Substantiation: Form 8283 is required for noncash contributions with claimed value over $500. For donations exceeding $5,000, a qualified appraisal and Section B of Form 8283 are typically required (IRS Form 8283 instructions; IRS Pub. 561).
• Deduction amount: If you donate long‑term appreciated real property (held >1 year) to a public charity, you can generally deduct the property’s fair market value, subject to adjusted gross income (AGI) limits (commonly 30% of AGI for gifts of appreciated capital gain property to public charities; cash gifts are subject to a different limit—usually 50% or 60% depending on the year and law). Excess may be carried forward up to five years.
• Mortgage-encumbered property: If the charity takes property subject to a mortgage or liability, the deductible amount is usually reduced by the debt assumed by the charity unless the charity agrees to take the property subject to the debt under certain safe-harbors. Consult Form 8283 guidance and your tax advisor.
• Basis and capital gains: By gifting appreciated property, the donor typically avoids recognition of the capital gain that would have occurred on sale. The charity, if it sells, generally is tax-exempt and will not pay tax on the sale (with important exceptions for unrelated business taxable income).

Citations: IRS Publication 526 and IRS Publication 561 on valuation. See the IRS charitable deduction overview: https://www.irs.gov/charities-non-profits/income-tax-deductions-for-charitable-contributions

Common hurdles charities cite

• Environmental liability, ongoing maintenance costs, and lack of marketability. Many charities accept property only if they can sell it quickly or if the property directly furthers their mission.
• Administrative overhead: recording, title transfer costs, and potential transfer taxes are real costs nonprofits must evaluate.

If the charity cannot accept the property, alternatives below may achieve similar tax outcomes.

Alternatives when direct donation isn’t feasible

• Donor-Advised Fund (DAF): Sell the property yourself, contribute proceeds to a DAF, and take the cash deduction for the sale (but selling first triggers capital gains tax unless held in an entity that shields gains).
• Charitable Remainder Trust (CRT): Transfer property into a CRT, receive an income stream for life or years, and leave the remainder to charity. CRTs can defer and spread taxable gain and provide an immediate partial tax deduction (complex; requires legal setup).
• Bargain sale: Sell the property to the charity at below-market price; you may get a partial charitable deduction equal to the difference between FMV and sale price.

For deeper strategy on appreciated assets, see FinHelp’s “Charitable Gift Strategies for Highly Appreciated Assets”: https://finhelp.io/glossary/charitable-gift-strategies-for-highly-appreciated-assets/

Practical checklist before signing the deed

• Confirm charity’s IRS 501(c)(3) status and acceptance policy.
• Obtain and retain a qualified appraisal and broker market analysis.
• Perform title and environmental checks; clear or disclose liens.
• Consult a tax advisor about AGI limits, possible carryovers, and state tax consequences.
• Prepare and file Form 8283 if required; get the charity’s signature where needed.
• Record the deed and obtain the charity’s written acceptance and acknowledgement.

Also review guidance on documenting noncash donations for taxes: https://finhelp.io/glossary/how-to-document-charitable-noncash-donations-for-taxes/ and our piece on using appreciated real estate for donations: https://finhelp.io/glossary/using-appreciated-real-estate-for-charitable-donations/

Typical timeline

• Small, clear-title residential gift to a mission-ready charity: 4–8 weeks.
• Commercial property or property needing environmental review: 2–6 months.
• Complex gifts involving CRTs or donor-advised funds: allow several months for legal and tax setup.

The effective gift date for tax purposes is the date the deed is transferred and accepted. To claim a deduction for a calendar tax year, deliver the deed before midnight on December 31 of that year.

Common mistakes to avoid

• Failing to get a qualified appraisal (or using an appraiser inexperienced with the property type).
• Assuming all charities will accept property — many will not.
• Ignoring liens, mortgages, or environmental problems that can reduce deduction or create future liability.
• Missing Form 8283 or failing to secure the charity’s signature when required.

Quick FAQs (brief answers)

• Who can accept donated real estate? Only organizations recognized as tax-exempt under IRS rules (typically 501(c)(3)) should be relied on for deductible gifts. Confirm in writing.
• Is the deduction equal to the purchase price? No. The deductible amount is generally the property’s fair market value at the time of the gift, supported by a qualified appraisal (IRS Pub. 561).
• Can I claim a deduction if the property has a mortgage? Yes, but the deductible amount is adjusted for liabilities; consult tax guidance and your advisor.

Closing guidance and professional disclaimer

In my work advising clients on gifts of real estate, the single best predictor of a smooth transaction is upfront coordination: verify the charity’s ability to accept the asset, obtain the right appraisal, and involve legal and tax advisors early. These steps protect your tax benefits and reduce the chance the charity will later refuse the gift.

This article is educational and does not replace personalized legal or tax advice. Consult a qualified tax professional or attorney before completing a gift of real estate. Authoritative references include IRS Publication 526 and Publication 561 (valuation of donated property) and the Form 8283 instructions available at the IRS website.

Sources

• IRS Publication 526, Charitable Contributions (IRS.gov).
• IRS Publication 561, Determining the Value of Donated Property (IRS.gov).
• Form 8283 instructions and the IRS charitable contributions page: https://www.irs.gov/charities-non-profits/income-tax-deductions-for-charitable-contributions
• FinHelp related entries: “Using Appreciated Real Estate for Charitable Donations” and “How to Document Charitable Noncash Donations for Taxes.”