Non-Cash Donations: Donating Real Estate and Appreciated Assets

Non-cash donations let you transfer property instead of cash to a qualifying charity. When structured properly, these gifts can amplify your charitable impact while offering important tax benefits — most notably a potential deduction for fair market value (FMV) and avoidance of capital gains taxes on appreciated property held more than one year.

In my practice advising donors and nonprofit boards for over 15 years, I’ve seen the largest tax benefits come from donating long-term appreciated securities and real estate directly to charities or using vehicles like donor-advised funds and charitable remainder trusts. Below I explain the tax rules, valuation and paperwork you’ll need, common pitfalls, practical strategies, and a step-by-step checklist you can use before you give.

How the tax deduction and capital gains relief work

  • Long-term appreciated property (held more than 1 year) given to a public charity is typically deductible at its fair market value, up to limits based on your adjusted gross income (AGI). For most public charities, that limit is 30% of AGI for gifts of appreciated capital gain property. If the gift goes to certain private foundations, the limit is generally lower (often 20% of AGI). (See IRS Publication 526 and related guidance.)
  • If you would have owed capital gains tax on the sale of the asset, donating it directly usually avoids that gain entirely because the charity receives the property tax-free and can sell it without the donor recognizing gain.
  • You must itemize deductions on Schedule A to claim the non-cash charitable deduction—if you take the standard deduction, you won’t receive the tax benefit for the gift.

Authoritative sources: IRS Publication 526 (Charitable Contributions) and Publication 561 (Determining the Value of Donated Property) explain these rules in detail (see links below).

Paperwork and valuation essentials

  • Form 8283: File IRS Form 8283 (Noncash Charitable Contributions) when total non-cash contributions exceed $500 for the tax year. For gifts valued over $5,000 (other than publicly traded securities), you generally need a qualified appraisal and the charity’s signature on Section B of Form 8283. See the IRS Form 8283 guidance for details.
  • FinHelp internal resource: our guide to Form 8283 — Noncash Charitable Contributions.
  • Qualified appraisal: Required for many gifts over $5,000. Use an appraiser who understands IRS rules (See IRS Publication 561). For securities held in brokerage accounts, a direct transfer to the charity often removes the appraisal requirement because market quotes establish FMV.
  • Documentation: Keep the deed/title, settlement statements, transfer records, appraisal reports, correspondence with the charity, and a contemporaneous acknowledgment from the donee organization (required for any gift of $250 or more).

Special rules for real estate

Real estate donations can be highly tax-efficient but carry additional complexities:

  • Title and transfer: The charity needs clear title. If your property has a mortgage or other lien, the tax outcome depends on whether the charity assumes the liability. Mortgaged property may reduce the deductible amount under liability rules; proceed only after confirming legal and tax consequences with counsel.
  • Use and condition of property: If the charity plans to use the property for a purpose related to its mission (e.g., housing for a nonprofit), you may claim FMV. If the charity will sell the property, the same FMV deduction rules apply for long-term appreciated property, but special rules or limitations could follow for certain types of property.
  • Bargain sale: If you sell the property to the charity at less than FMV, the transaction is a partial sale and partial charitable contribution. You’ll recognize gain on the sale portion and get a deduction for the charitable portion.
  • Environmental and title risk: Real estate may carry environmental liabilities. Charities often decline property gifts with unresolved issues; always conduct due diligence (environmental, title, structural) first.

Common types of non-cash gifts and tax treatment (short list)

  • Publicly traded securities (long-term): Deduct FMV; avoid capital gains. Transfer via broker to the charity to simplify paperwork and valuation.
  • Real estate (investment or personal): Deduct FMV for long-term appreciated property, subject to limits and documentation rules; watch mortgages and liabilities.
  • Closely held business interests, partnership interests, inventory, and collectibles: Often have special valuation, deductibility, and basis rules; some collectible donations are limited to cost basis rather than FMV.

For more on valuation for complex items like art and real estate, see our guide on Valuing complex donated assets: art, real estate, and collectibles.

Practical strategies donors use

  • Donate appreciated securities directly: This is the simplest way to avoid capital gains and claim FMV. It’s often faster and involves fewer appraisal headaches.
  • Use a donor-advised fund (DAF): Contribute appreciated securities to a DAF to claim an immediate tax deduction. The DAF can sell the assets tax-free and recommend grants to charities over time.
  • Charitable remainder trust (CRT): If you need income, a CRT lets you transfer appreciated property, receive income for life (or term), and leave the remainder to charity—deferring and often reducing tax while securing an income stream.
  • Bunching: Combine multiple years’ worth of charitable giving into a single tax year (bunching) to exceed the standard deduction threshold and itemize.

See related FinHelp content on Gifting Appreciated Assets to Charity: Tax-Smart Approaches for examples of these strategies in action.

Examples (illustrative)

1) Appreciated stock example

  • Bought stock for $20,000 (basis) more than a year ago. Current value $50,000. If you sell, you’d owe capital gains tax on $30,000 of gain. If you donate the shares directly to a public charity, you may deduct $50,000 (FMV) and avoid the capital gains tax.

2) Investment property example

  • Purchased for $100,000, current market value $300,000 (long-term). Donating the property could allow a $300,000 deduction (subject to AGI limits) and avoid taxes on the $200,000 appreciation. But if the property has a mortgage, legal tax consequences change—consult tax counsel.

These are simplified illustrations. Real outcomes depend on AGI limits, whether you itemize, and specific property characteristics.

Common mistakes and how to avoid them

  • Failing to get a qualified appraisal when required — this can disallow your deduction in an audit.
  • Donating property with unresolved title, environmental, or lien issues — charities often refuse such gifts.
  • Assuming the deduction equals the sale price the charity later obtains — FMV at the donation date is the measure, not the later sale price.
  • Forgetting to file Form 8283 or to secure the charity’s signature for large gifts (Section B) — this can lead to denied deductions.

Step-by-step checklist before you donate

  1. Confirm the donee is a qualified 501(c)(3) public charity. Verify on IRS tools before proceeding.
  2. Determine whether the asset is long-term appreciated property (held >1 year).
  3. Obtain a current market valuation; arrange a qualified appraisal when required.
  4. Check for mortgages, liens, environmental issues, and title defects on real estate.
  5. Decide whether to transfer directly (easier for securities) or use an intermediary (DAF or CRT).
  6. Gather documentation and make sure the charity will accept the asset.
  7. File Form 8283 and attach the qualified appraisal if required; get the charity’s signature where needed.
  8. Keep all transfer records and the charity’s contemporaneous acknowledgment.

When to involve professionals

Large or complex gifts (real estate, private business interests, high-value art) should involve a CPA or tax attorney, a qualified appraiser, and counsel familiar with nonprofit acceptance policies. In my practice, coordinating these advisors early avoids surprises and helps structure the gift to meet both philanthropic and tax goals.

Key references

FinHelp internal resources:

Professional disclaimer

This article is educational and does not constitute legal, tax, or financial advice. Rules for charitable deductions and valuation change and are fact-dependent. Consult a qualified tax professional or attorney before completing large or complex non-cash donations.