Can I Write Off Donated Properties on My Taxes?
Non-cash donations of physical property are tax-deductible only if you give the donation to charities recognized by the IRS. Whether your donated property is real estate, including homes or land, or other physical property such as a car, computer or household goods, you must determine its fair market value and keep written records to qualify for a tax deduction.
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Recognized Charities
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Your property donation is tax-deductible only if the organization receiving that property is a registered 501(c)(3) organization or another IRS-qualified tax-exempt organization, such as a church or nonprofit medical center. Visit the IRS website and download Publication 78 (see Resources) to find a list of current IRS-approved organizations for tax-deductible donations.
Determining Value
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The value you can write off on your taxes is based on the fair market value (FMV) of your donated property. If you are deducting less than $5,000 for the property, you can generally base your FMV estimate on the sales prices of similar items in your area. For example, if you are donating a computer, the FMV is based on the sales prices of similar computers in your area. If the computer is out-of-date, you must use resale prices for used models with comparable features, not new models with upgraded features. Household goods must be in good condition to qualify for write-offs.
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High Value Items
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To donate high value physical property, such as art, jewelry or real estate, you must have a professional appraiser assess the property value. Real estate, in particular, requires special valuation, often using two or three different methods to determine a FMV for your deduction. A professional appraisal is one of these methods. You may also need to find the sale price of similar homes or land in your area and then adjust the valuation for any features specific to your donated property, such as condition, age and size. Determining the full replacement cost of any buildings on the property is another valuation method that may factor into your real property FMV.
Proof of Value
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Keep a written record of your property's description, donation date, estimated value and the name and address of the receiving charity. Ask the charity for a receipt that acknowledges the donation in writing and keep any appraisals or other valuation paperwork with your notes. This will help you write off the property accurately on your taxes and help prove your case should you be audited. Include photos of the property in the condition it was donated for further proof of value.
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References
Resources
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