Donating rental property to charity, a unique way to get rid of property

Many people understand that you can donate houses to charity, donate commercial property to charity, and donate vacant and abandoned land to charity. However, many property owners don’t realize that you can donate rental property to charity. 

Do you own a rental property such as an apartment, 2-flat, 3-flat or other multi-family property? What about a rental condo or single-family home that you rent?

As a rental property owner in Chicago you can donate rental property to a charity as a unique way to transfer the property and reap the benefits. 

Why donate Chicago rental properties to charity?

Much like donating other types of real estate to a charity, donating your rental property comes with several tax incentives and other benefits such as:

• Reducing estate taxes
• Avoiding capital gains taxes, and
• capitalizing on large tax deductions. 

However, for many people the interest in donating Chicago rental properties to charity is more altruistic than it is for financial gain. Donating rental real estate to a nonprofit in Chicago also offers personal emotional gain and reduced stress such as:

• Giving back to Chicago’s southside and westside neighborhoods. 
• Help others meet their housing needs.
• Reduction in challenges of renting Chicago real estate. 
• Reduction in overall real estate and landscape maintenance costs

Donating rental property to a Chicago charity provides a benefit to you as well as your partner charity. Though, it’s important to consider a few steps before jumping right in. 

First, it is important to talk to your receiving charity first. Many charities cannot take on the cost and maintenance of a rental property. While the donated rental property is free, the cost of maintaining a property until used or sold can be significant. 

Second, speak with a financial advisor to ensure that you are properly documenting the donation, as well as taking advantage of appropriate tax incentives to justify the donation. Like anything, donating rental property to a charity in Chicago needs to be done correctly in the eyes of the IRS to be valid. 

Third, if possible take care of additional costs such as back taxes, utilities, and unpaid mortgage. While there are charities that will take a Chicago donated rental property with an unpaid mortgage, there are not many. 

Donating a rental property to Chicago charities is a great way to give back to the community as well as benefit from tax incentives. Curious about donating your rental property to a Chicago non-profit? Contact your financial advisor to learn existing opportunities.