Donating Property to Charity: What You Need to Know

When most people think about charitable giving, they envision writing checks or making online cash donations, but some of the most impactful gifts come in the form of assets—real estate, art, collectibles, and other property. For many donors, particularly those with more concern about taxes or long-held assets, donating property can provide substantial tax advantages and amplify impact for the causes they care about most. 

Donating property to charity can help donors mitigate capital gains taxes, receive valuable tax deductions, and make a more significant philanthropic impact than they might achieve through cash contributions alone.

Whether you’re considering gifting a family home, a piece of farmland, or a valuable collectible, property donations can unlock new possibilities for your charitable giving strategy and your estate—but you’ve got to be sure you work with philanthropic advisors who can create a strategy that works for you. 

Keep reading about donating property, or get in touch with Greater Houston Community Foundation today to get started giving. 

Key Insights

• Donating appreciated property directly to charity allows you to avoid capital gains taxes while receiving a charitable deduction for the full fair market value of the asset.
• Various types of property can be donated to charity, including real estate, tangible personal property like art and collectibles, and business interests.
• The IRS requires a qualified appraisal for any donated property valued above $5,000, and only long-term appreciated assets typically qualify for full fair-market-value deductions.
• Working with a community foundation can provide essential guidance, simplified administration, and the flexibility to direct property proceeds into a donor advised fund for strategic grantmaking.
• Property donations can be powerful estate planning tools, and can help you reduce estate taxes while extending your philanthropic values across generations.

Table of Contents

• What types of property can be donated?
• How to donate property to a nonprofit
• What are the IRS rules for property donations?
• Can you avoid capital gains tax by donating to charity?
• Benefits of donating property through a community foundation
• How donating real estate fits into legacy and estate planning
• Next steps for donors considering charitable contributions of property
• Interested in donating property to charity? The Foundation can help.

What types of property can be donated?

The range of assets that can be donated to charity extends far beyond cash gifts. But what property can be donated? Familiarize yourself with the many types of donatable property so that you can better identify opportunities within your own portfolio.

Real estate donations are some of the most common and impactful property donations. This category includes:

• Primary or secondary residences
• Undeveloped land or farmland
• Rental properties
• Commercial real estate
• Vacation homes

Real estate comprises a significant portion of household wealth in the United States, yet it remains an underutilized charitable giving asset. Many donors don’t realize that gifting property directly to charity can be more beneficial than selling it first and donating the proceeds. At Greater Houston Community Foundation, we accept real estate donations valued at $500,000 or more.

Tangible personal property can be physical assets like:

• Fine art and collectibles
• Jewelry and precious metals
• Vehicles, including cars, boats, and aircraft
• Antiques and furnishings

Securities and business interests can also be donated, though these typically involve more complex planning. For more information about donating appreciated stock and other securities, consult with your financial advisors about how these gifts might fit into your overall strategy.

How to donate property to a nonprofit

While the process of donating property requires more planning and coordination than a simple cash gift, the benefits are often more than worthwhile. Here’s what to expect:

1. Identify the property you want to donate and determine its approximate value. This initial assessment helps you plan for the potential tax benefits and charitable impact of your gift.
2. Engage with your intended charitable organization to make sure they can accept your specific type of property. Not all nonprofits have the capacity to receive and manage property donations, which is where community foundations like Greater Houston CommunityFoundation can play a vital role. We have the infrastructure and expertise to accept, manage, and liquidate donated property efficiently.
3. Obtain a qualified appraisal for any property valued above $5,000. This appraisal must be conducted by an independent, qualified appraiser and documented properly for IRS purposes.

Throughout this process, working closely with your tax advisor, estate planning attorney, and the Community Foundation’s philanthropic team can help ensure that your gift is structured correctly and that all legal and tax requirements are met.

What are the IRS rules for property donations?

The IRS has specific and extensive guidelines governing property donations to encourage proper valuation and tax treatment. While this is by no means an exhaustive list, some of the most current and important IRS requirements for donating property include:

• Qualified appraisals: Any donated property valued above $5,000 requires a qualified appraisal by an independent professional. This appraisal must be completed within specific timeframes and documented on the appropriate IRS forms.
• Long-term holding period: To receive a deduction for the full fair market value of appreciated property, you must have held the asset for more than one year to qualify as a long-term capital asset. Assets held for shorter periods may be limited to cost basis deductions.
• Special rules for certain property types: Partial interests in property, use-restricted donations, and certain types of tangible personal property may have additional limitations or requirements.

It’s difficult to fully satisfy the sometimes complex documentation and compliance requirements without tax professionals and philanthropic advisors in your corner. At Greater Houston Community Foundation, our philanthropic advisors work alongside your professional advisors to help make sure your property donation is structured correctly in an effort to reach the maximum benefit to both you and the causes you support.

Can you avoid capital gains tax by donating to charity?

One of the most significant financial advantages of donating appreciated property is the ability to avoid capital gains taxes on the appreciation—taxes you would otherwise owe if you sold the asset.

When you donate long-term appreciated property directly to a qualified charitable organization, you generally avoid paying capital gains taxes on the appreciation, while also receiving a charitable deduction based on the property’s fair market value. This dual benefit can maximize both your giving power and your tax savings, and is the basis for most strategies involving appreciated property donation. 

Consider this example:

Suppose you purchased land twenty years ago for $200,000, and it’s now worth $1 million. If you sold the property, you would owe capital gains tax on the $800,000 appreciation. At a 24% capital gains rate, that’s $192,000 in taxes—money that neither benefits you nor supports charitable causes.

If you instead donate that property directly to charity, you would avoid that $160,000 tax bill entirely and receive a charitable deduction for the full $1 million value. This would both allow you to contribute significantly more to the causes you care about while also reducing your tax burden.

Benefits of donating property through a community foundation

While many nonprofits lack the infrastructure to accept property donations efficiently themselves, community foundations like Greater Houston Community Foundation are specifically equipped to facilitate these complex gifts.

Some reasons why you might benefit from donating property through a community foundation include:

How donating real estate fits into legacy and estate planning

Because they can offer benefits that extend across generations, real estate donations can be a powerful tool within broader legacy and estate planning strategies. Here are a few reasons you should consider donating real estate as part of your estate planning:

It can reduce estate taxes and simplify administration

Property donations can significantly reduce the value of your taxable estate, potentially saving substantial estate taxes for high-net-worth donors. By removing appreciated property from your estate before your passing, you simplify the administration process for your heirs while supporting charitable causes.

It can extend philanthropic values across generations

Involving family members in decisions about how donated property proceeds are granted creates opportunities to pass down values and establish lasting traditions of giving. A donor advised fund established with real estate proceeds can include multiple generations as advisors, encouraging them to carry on your charitable legacy.

It can complement other planning vehicles

Property donations work in concert with wills, trusts, and other vehicles for estate planning charitable donations. Whether you’re considering an outright gift during your lifetime, a charitable remainder trust, or including property bequests in your will, thoughtful planning ensures these elements work together harmoniously.

Most high-net-worth families are interested in preserving wealth and supporting charitable causes, and donating real estate and other property is often an essential strategy for doing just that.

Next steps for donors considering charitable contributions of property

If you’re thinking about donating property to charity, here’s how to move forward thoughtfully and strategically:

1. Think about your broader philanthropic goals: The most effective property donations align with your overall charitable vision. Take time to consider what impact you want to create, what causes matter most to you, and how a property gift advances those goals.
2. Consult your professional advisors: Begin by discussing your intentions with your tax advisor, estate planning attorney, and financial planner. They can help prepare you for the specific tax implications of your gift and explain how it fits within your overall charitable giving financial planning strategy. 
3. Connect with the Community Foundation: Reach out to Greater Houston Community Foundation early in your planning process. Our philanthropic advisors collaborate with your existing advisors, and can help you explore different giving vehicles, discuss your charitable goals, and determine the best approach for your particular situation.
4. Consider timing and requirements: Property donations involve specific timing considerations, appraisal requirements, and due diligence processes. Planning ahead can help make sure these steps unfold smoothly and that you maximize the benefits of your gift.

Interested in donating property to charity? The Community Foundation can help.

Donating property can be both a powerful tax strategy and a meaningful way to support the causes that matter most to you. While the process involves more complexity than tax deductible charitable donations of cash, the potential impact—both philanthropic and financial—can be substantially greater.

Greater Houston Community Foundation has the expertise, infrastructure, and local knowledge to make property donations easier, more strategic, and more impactful. We work alongside your professional advisors to ensure your gift achieves your charitable and financial goals while navigating the complexities of appraisals, due diligence, and tax compliance.

Whether you’re considering donating a family home, a piece of land that’s been in your family for generations, or valuable personal property, we’re here to guide you through every step of the process. Connect with our philanthropic advisors today at 713-333-2210 or reach out directly to get started.

More Helpful Articles by Greater Houston Community Foundation: 

• Year-End Giving Deadlines: Your 2025 Tax-Planning Checklist
• Incorporating Charitable Giving into Your Investment Strategy
• How To Make a Bequest to a Donor Advised Fund
• What Is a Bequest?
• Integrating Philanthropy into High-Income Tax Planning

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