Trends in charitable giving: Tax advantages of real estate donations

High-net-worth individuals and family offices are increasingly incorporating real estate and land donations into their charitable giving strategies. With property values steadily increasing over the past several years and charitable organizations becoming more capable of evaluating and accepting noncash gifts, 2026 presents a favorable environment for donors considering gifts of real property.

As charitable giving strategies grow more sophisticated, donors are placing greater emphasis on asset selection and timing. Real estate can align philanthropic intent with income and estate planning goals, particularly for highly appreciated or illiquid assets that no longer fit a long-term plan.

Why Gifts of Real Estate Are Gaining Traction

Several factors are likely contributing to the increased interest in noncash gifts:

• Significant appreciation in many markets has resulted in larger unrealized gains
• Illiquid or inherited property can be burdensome to sell, making gifting more appealing
• Donors are seeking solutions to reduce taxable estates while supporting philanthropic goals
• Donor-advised funds and public charities are now better equipped to evaluate and accept real property

While residential homes are rarely donated, gifts of land, commercial buildings and lots, and partnership interests are becoming more common among sophisticated donors.

Tax Benefits at a Glance

Donating appreciated property may provide:

• A fair market value charitable deduction when contributed to a public charity
• The ability to contribute the asset directly rather than selling it, which may limit the recognition of taxable gain otherwise associated with a sale
• Potential estate tax benefits, particularly when the property is highly appreciated or illiquid

For individuals experiencing a high-income or high-gain year, a real estate gift can be an effective strategy to reduce taxable income or stay below the top marginal tax bracket.

How and When to Donate Property Strategically

Where gifts can be donated: Public charities, private foundations (deductions limited to cost basis), and donor-advised funds (if accepted). Donors typically receive more favorable tax treatment when contributing to a public charity. Private foundation gifts can still be strategic but require additional planning since the deduction may be significantly lower.

What types of property qualify: Commercial and industrial buildings, and land, including farmland, timberland, and development lots. Zoning (commercial vs. agricultural vs. residential) affects feasibility and due diligence requirements.

When gifting is most beneficial: In advance of liquidity events, after rapid appreciation, when removing illiquid assets from an estate, or when market conditions support a high valuation. Since the deduction is based on the appraised value as of the contribution date, timing matters—especially for assets sensitive to seasonality or market volatility.

Key Steps in the Gifting Process

Gifting real estate to a charitable organization is a multistep process that benefits from thoughtful planning, ideally well in advance of year-end. Early coordination helps address feasibility, valuation, and acceptance considerations that can affect both timing and tax outcomes. Understanding these steps upfront allows donors to set realistic expectations and avoid delays during execution.

1. Early Feasibility Review

Before a property can be donated, charities often must evaluate:

• Environmental risks
• Liens or debt
• Property condition
• Insurance requirements
• Marketability

Debt-encumbered properties are especially complex and can reduce the tax benefit.

2. Obtain a Qualified Appraisal

A qualified appraisal is required for donations of real property over $5,000 and plays a central role in both tax reporting and charity acceptance. The timing of the appraisal is key, as it must be dated no more than 60 days before the contribution.

3. Work with Advisors and the Charity or Fund

Since not all charities are equipped or willing to accept real estate:

• Confirm acceptance requirements early
• Understand their due diligence process and closing timeline
• Coordinate legal, tax, and valuation advisors to avoid delays

4. Transfer and Reporting

Once the property is approved, the transfer and reporting phase moves into a series of formal steps that must be completed accurately and on time. This process typically includes:

• Title review and environmental questionnaires
• Deed transfer
• Completion of Form 8283
• Charity acknowledgment
• IRS compliance requirements

Common Mistakes to Avoid

Awareness of the following pitfalls can help donors plan more effectively and reduce the risk of delays, diminished tax benefits, or failed transfers.

• Donating property with undisclosed environmental liabilities
• Assuming all charities accept real estate
• Overlooking realistic appraisal timelines
• Relying on outdated or optimistic valuation assumptions
• Donating debt-encumbered property without understanding the tax consequences
• Beginning the process too close to year-end

We Can Help

Real estate donations remain an attractive strategy for individuals seeking to combine tax efficiency with meaningful philanthropic impact. Early planning, qualified appraisals, and close coordination with experienced advisors help maximize benefits and promote a smooth process.

Before you donate art, vehicles, land, or real estate, contact our High Net Worth team. We can help you evaluate viability, understand market conditions, coordinate appraisal timing, and avoid the year-end rush that limits flexibility.

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The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.