Seller question: Can I donate a house to a non-profit?

Windy City Cash Buyers has been the most trusted fast cash buyer of distressed houses in Cook County, IL for nearly forty years. We buy distressed houses for fast cash and in as is condition. As the most trusted cash buyer of houses we have decades of valuable information that we like to share in our seller/buyer questions. 

Today’s seller question is about one of the least known aspects of real estate – donating a house to a non-profit. 

Seller question:

We’ve owned a house in North Lawndale. The house has been vacant for years and will need some upgrades and cosmetic repairs. We have talked about selling my house for years and donating the money to a charity, but then a friend suggested that it might be better to donate a house directly to a non-profit organization. My first question is, can I donate a house to a non-profit. If so, then is it better to sell my house and donate money, or donate my house to a non-profit?

Answer:

Wow, great question, and kudos to you for choosing to donate a house to a non-profit. To answer your first question, yes, you can donate a house to a non-profit. That does come with a caveat though. Will the non-profit of your choice take the house donation. Many non-profit organizations will accept a house as donation, however, if the non-profit cannot afford to maintain the house, pay utilities and property taxes, use the house, or invest time in selling or rehabbing a house then they might not. So, before you make your decision, contact the non-profit and ask, “Can I donate a house to your non-profit?”

The second part of your question goes to what is the best option. From Windy City Cash Buyer’s point of view, donating a house to charity is a better option than selling a house and donating the proceeds. The reason is because of the financial benefits you receive by donating a house. 

When you donate a house to nonprofits in Chicago you may be able to use the cost basis of your house (original purchase value) as a charitable deduction for up to 60% of your adjusted gross income. Another option is to use the current value of your home as a charitable deduction at 30% of your adjusted gross income. Additionally, you and the receiving charity can avoid capital gains taxes for the appreciated value of your house. Lastly, by donating your house to a charity you can reduce estate taxes since the house will be transferred to a non-familial entity. 

Can I donate a house to a non-profit? Yes, you can. But, to do so contact your financial advisor prior to the donation to ensure you and the non-profit receive the best financial benefits from your charty house donation.