REAL ESTATE DONATIONS
IRS Publication 526
DEFINITION of 'IRS Publication 526'
A document published by the Internal Revenue Service (IRS) that provides information on how a taxpayer can claim deductions for charitable contributions. IRS Publication 526 outlines the types of organizations that qualify for charitable deductions, the amount of contributions that can be deducted from a tax obligation, how to report contributions and the type of contributions that qualify. Organizations that qualify for tax deductions are non-profit groups, including scientific, educational, charitable and religious organizations as well as those dedicated to preventing cruelty to children or animals.
To learn more visit www.irs.gov
Contributions of Property
If you contribute property to a qualified organization,
the amount of your charitable contribution
is generally the fair market value of the
property at the time of the contribution. However,
if the property has increased in value, you
may have to make some adjustments to the
amount of your deduction.
IRS Publication 526, page 7.
Cars, Boats, and Airplanes
The following rules apply to any donation of a
A qualified vehicle is:
A car or any motor vehicle manufactured
mainly for use on public streets, roads, and
A boat, or
Deduction more than $500. If you donate a
qualified vehicle with a claimed fair market
value of more than $500, you can deduct the
The gross proceeds from the sale of the
vehicle by the organization, or
The vehicle's fair market value on the date
of the contribution. If the vehicle's fair market
value was more than your cost or other
basis, you may have to reduce the fair
market value to figure the deductible
amount, as described under Giving Property
That Has Increased in Value, later.
Form 1098-C. You must attach to your return
Copy B of the Form 1098-C, Contributions
of Motor Vehicles, Boats, and Airplanes (or
other statement containing the same information
as Form 1098-C) you received from the organization.
The Form 1098-C (or other statement)
will show the gross proceeds from the sale of the vehicle.
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
Publication 526 (2017)
To receive the maximum tax deduction on your car donation, and to receive the satisfaction that the full value of the car benefits a charitable purpose, give it to a charity that will use the vehicle in its operations or will give it to a person in need. Otherwise, your tax deduction will not be based on the fair market value, but will be limited to the amount of money the charity receives from the sale of your car. If the charity you are donating to does sell the vehicle, ask what percentage of the proceeds they receive. See Car Donations: Taking Taxpayers for a Ride for more.
Ask if the charity accepts car donations directly, without involving a third party. If possible, drive the vehicle to the charity instead of using a towing or pickup service. This will allow the charity to keep the full amount of any proceeds from selling the car.
Make sure the charity is eligible to receive tax deductible contributions. Ask for a copy for your records of the organization’s IRS letter of determination which verifies its tax exempt status.
Be sure that you get a receipt from the charity for your car donation.
REAL ESTATE CORPORATIONS CAN DONATE SPACE TO A NONPROFIT, BUT NOW RENT IT OUT TO A NONPROFIT.
Clothing and Household Items
You can't take a deduction for clothing or
household items you donate unless the clothing
or household items are in good used condition
Exception. You can take a deduction for a
contribution of an item of clothing or a household
item that isn't in good used condition or
better if you deduct more than $500 for it and include
a qualified appraisal of it with your return.
Household items. Household items include:
Furniture and furnishings,
Other similar items.
Household items don't include:
Paintings, antiques, and other objects of
Jewelry and gems, and
Fair market value. To determine the fair market
value of these items, use the rules under
Determining Fair Market Value, later.
Property Subject to a Debt
If you contribute property subject to a debt
(such as a mortgage), you must reduce the fair
market value of the property by:
1. Any allowable deduction for interest you
paid (or will pay) that is attributable to any
period after the contribution, and
2. If the property is a bond, the lesser of:
a. Any allowable deduction for interest
you paid (or will pay) to buy or carry
the bond that is attributable to any period
before the contribution, or
b. The interest, including bond discount,
receivable on the bond that is attributable
to any period before the contribution,
and that isn't included in your income
due to your accounting method.
This prevents you from deducting the same
amount as both investment interest and a charitable
If the recipient (or another person) assumes
the debt, you must also reduce the fair market
value of the property by the amount of the outstanding
The amount of the debt is also treated as an
amount realized on the sale or exchange of
property for purposes of figuring your taxable
gain (if any). For more information, see Bargain
Sales under Giving Property That Has Increased
in Value, later.
A limited liability company (LLC) is not a separate tax entity like a corporation; instead, it is what the IRS calls a "pass-through entity," like a partnership or sole proprietorship. All of the profits and losses of the LLC "pass through" the business to the LLC owners (called members), who report this information on their personal tax returns. The LLC itself does not pay federal income taxes, although some states impose an annual tax on LLCs.
A Subchapter S (S Corporation) is a form of corporation that meets specific Internal Revenue Code requirements. The requirements gives a corporation with 100 shareholders or fewer the benefit of incorporation while being taxed as a partnership.
A C corporation is a business term that is used to distinguish this type of entity from others, as its profits are taxed separately from its owners under subchapter C of the Internal Revenue Code. In an S corporation, the profits are passed on to the shareholders, and are taxed based on personal returns.