How to Claim a Charitable Donation of Property

Your donation of property to a local charity provides you with a number of benefits. The goodwill you help create between charities and local businesses also has a financial benefit if you know how to claim a charitable donation of property. The key to properly claiming property donations is extensive documentation throughout the entire process.

Instructions

Difficulty: Moderate

Things You’ll Need:

• Sales agreement from charity
• Schedules A and B for itemized deduction
• Appraisal
• Form 1040
• Photos of property

Earn Value for Your Donation of Property on Income Taxes

1. Deduct the donation of property up to the established federal limit, based on a percentage of your annual income. Property donations to charitable causes can usually be deducted up to about a third of your total annual income.
2. Carry over excess-land value from past tax years to claim your charitable donation of property. The Internal Revenue Service (IRS) allows you to apply extra value from your donations for up to 5 business years in case you have made large donations.
3. Study the sale prices of neighboring properties to determine fair-market value when charities use land instead of selling it. You need to keep an eye out for zoning restrictions on these properties to find common ground when determining fair-market value.
4. Schedule a professional appraisal if you believe your property is worth at least $5,000. To determine the validity of your charitable deductions, the IRS requires a letter from a qualified appraiser.
5. Procure a written statement from the charity in question if it plans on selling property to small businesses or the less fortunate. There is typically a minimal limit at which you need a written statement for your claim, but it is always a good idea to get this acknowledgment of the sale price and new owner.
6. Insert the value of your donated property into the appropriate line on your income-tax form. You will need to fill out Schedules A and B from the IRS website, allowing you to itemize your deductions (see Resources below). Calculate your donations instead of vehicle contributions, and add them with other deductions.

Tips & Warnings

• Comply with IRS regulations regarding non-profit organizations that are eligible for charitable donations of property. You need to research an organization's background and its tax status before donation to get full value for your deduction. Applicable organizations include amateur-sports groups and shelters that need to expand outward.