Although it's often overlooked, many tax-exempt organizations and charities accept houses and other pieces of real estate as donations to support their organizations. Giving a house to charity can benefit you as well. You can free yourself from a costly and unprofitable property, or avoid the capital gains tax you would incur if you profited from the outright sale of the home. Giving your house to charity can also save your heirs from paying a significant inheritance tax after your death--a tax they would need to pay if you decided to keep your home.
Decide how you want to donate your house to charity. One option is to leave the house in your will to the organization of your choice, which would allow you to occupy the house for the rest of your life. If you own a second home that you would like to donate, you can also set up a charitable remainder trust. This arrangement donates the house to charity immediately, but enables you to receive trust payments for the rest of your life (or a specified amount of time) on the money invested in the trust from the trustee's subsequent sale of the home. You'll also mitigate the cost of the capital gains tax and receive a sizable tax deduction if you set up a charitable remainder trust.
Speak to a philanthropic lawyer who is well versed in the legal aspects of house donations. Because a house is a high-value donation, it is important to do plenty of research about the process of donating it to charity and about the organization that you would like to support. A philanthropic lawyer can guide you through the process and ensure that the transaction goes smoothly.
Contact the planned-giving department of the organization to which you would like to donate your house to discuss whether it accepts house donations and the process for donating. If you don't have a charity in mind, or would like more guidance through the house donation process, contact a consultant who has experience in guiding real estate donations. One such organization is Real Estate for Charities, which works with both charitable organizations and individuals interested in donating real estate. Some of its clients are the AARP Foundation, United Way America and the Salvation Army.
Determine the value of your home at the time of donation. For tax-deduction purposes, you will write off the donation in an amount equal to the current value of your home--not the value when you purchased the house.
- slava296/iStock/Getty Images