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For some charities, a donation of land helps them to directly achieve their mission. For others, it's a salable asset that they can turn into money to further their cause. In either case, as long as you're giving the land to a tax-exempt organization and staying within the Internal Revenue Service's rules and limitations, the donation can generate a valuable tax write-off for you.
The IRS applies a number of limitations that can cap the value of your donation. First, you must donate to an IRS-recognized charity. Second, depending on the type of charity, your deduction could be capped at either 50 or 30 percent of your adjusted gross income per year. If you exceed the cap, you will have to carry any additional value forward for up to five years. Third, if your land has gone up in value, the IRS limits donations of appreciated property to 20 percent of your income. Finally, if your adjusted gross income exceeds $250,000 or $300,000, depending if you are single or married, the value of your itemized deductions can be reduced by as much as 80 percent.
Choosing a Charity
Not every eligible charity wants land. For some charities, land is a burden since, if they don't have a use for it, they may need to pay to own it and to sell it. Other charities, on the other hand, are in the business of owning and using land and would love to take your land as a donation. Housing, conservation and environmental organizations frequently fall into this group. And some charities, while they may not use land, have the staff to sell it.
Preparing to Donate
Before most charities will accept a donation of land, they require that it have clear title. If you have any ownership issues related to inheritances, you may need to work with a title company or attorney to remove them. You'll probably also have to pay off your mortgage. Finally, since you can only deduct the fair market value of your land, you will also need to have it professionally appraised to establish a value for your deduction.
Transferring the Land
Actually transferring the land is relatively simple. Usually, you will work with the charity's legal team to draft a deed by which you give the charity ownership of the land. Once you've made the donation, you enter its value with your other charitable contributions on Schedule A of your 1040 tax return. You will also have to attach Form 8283, which is where the IRS has you detail your non-cash contributions.
- American Institute of CPAs: Planning for Charitable Contribution Limitations
- Opportunity Junction: Donation FAQs
- Almost Heaven Habitat for Humanity: Donate Land
- Michael Silver and Company: The Phaseout of Itemized Deductions Has Been Reinstated for Higher Income Taxpayers
- Thomson Reuters/PPC: Charitable Donations of Devalued Real Estate
- Internal Revenue Service: Publication 526 - Charitable Contributions
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