The current value of appreciated real estate held long-term is deductible, less any indebtedness, if transferred to a 50% charity, up to 30% of AGI, with a five-year carryover for excess deductions. Transfers to 30% charities are deductible at cost basis only, up to 20% of AGI, with a five-year carryover. Realty with short-term gain is deductible at cost basis.
Capital Gains Considerations
No gain is reportable. The deduction is not reduced for prior depreciation deductions, unless the donor took an accelerated depreciation that would have resulted in the recapture of ordinary income upon a sale. Gain must be reported from any bargain sale, including gifts of mortgaged realty.
Date Gift Is Effective
The gift is made on the date an executed deed is delivered to a charity or its agent. If the deed is mailed, the postmark determines the date of the gift. In some states, the date of the gift may be when the deed is recorded.
Method of Transfer
Transfer of title of contributed realty is generally made by a quit-claim deed, unless a warranty deed is deemed necessary by either of the parties.
Valuation of Gift Assets
The value is established by an independent appraisal. Comparable selling prices for similar properties may be the best evidence of value. Indebtedness reduces value.
A receipt from the charity and a quid pro quo statement are required. For deductions exceeding $5,000, donors also need qualified appraisals and completed Sections A and B of Form 8283, including a declaration by the appraiser and a donee acknowledgment.
Charities generally require Level 1 environmental assessments. The title should be checked for liens and defects. The charity may incur taxable income if mortgaged realty was owned by the donor less than five years and the mortgage is less than five years old.