Discussion:Real Estate Contributions
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Discussion Forum Index --> Tax Questions --> Real Estate Contributions
| 21 November 2006 | |
| Contribute residential rental real estate to a charitable organization for charity:
Don't seem to find much on this one, so I would appreciate some additional comments: If a taxpayer quit claims real estate to a charity that has debt with it, it seems that the FMV less the debt (net equity) is a charitable deduction and no tax is due on the appreciation even if held for many years. The charity then sells the property and pays off the debt keeping the proceeds. If there is not a lot of equity (FMV - debt) in the property, but there a lot of long-term capital gain if sold, do you think it is advisable to claim the charitable donation? Considerable tax can be saved in this transaction by just not having the capital gains tax on the appreciation. Do contribution deductions in excess of $5,000 cause a lot of scrutiny on returns? I know that the charity and the appraiser need to sign the back of the form 8283 after the appraisal is done and then the charity needs to report the sale of form 8282 if the donation is claimed. Am I missing anything since the taxpayer gets the debt paid off in the transaction? If anyone has experience donating real estate to charity, I would appreciate some input here. | |
| 26 November 2006 | |
| Sheldon, the debt assumed or paid off by the charity is treated as an amount realized from a sale or exchange. If the amount realized exceeds the taxpayer's adjusted basis in the property, there is a capital gain to report in the year of the transfer. | |
| 1 December 2006 | |
| Riley, Could you tell me how you reached this conclusion or what the authority for this is? I am just surprised that if this is true, it doesn't seem to show up in the form instructions or publications on donating property. It also seems like it is not cancellation of debt income as the debt obligation went with the property transfer and there was no sale. Anyone else have experience with this one or a good place to find the authority? | |
