Donating my house to a church?

Taxes

I own a house (House A) and I was thinking of donating it to a church. I would donate said house for exactly what I paid for it last year. Can the church then sell the house at market value (way higher than the donated value by $250k)? And use those profits to do public good? Or is the church subject to Capital Gains? (They have tax exempt status) The church’s plan would be to buy a parcel of land and use it for a farmers market and reduced rate housing*** I also own another house (House B) that the church has been renting for a year. It’s actually a farm where the church grows food for sale/profit, this would go with their plan for the farmers market thing above. The church would also use part of the proceeds of the House A sale to build a well on my House B property in lieu of rent for the next 5 years. (This is less money overall than they would spend renting without improvements). The church would be using the well to grow food because currently they’re using city water.

All parcels of land are zoned for the intended use.

Posted Apr 27, 2022, 1:12 PM UTC

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DeluxeXL​•

I would donate said house for exactly what I paid for it last year.

This does not make sense. You either donate house as is, or sell the house and donate cash.

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Ecstatic_Being8277​•

Long story short: NO!

Donating an item and expecting an 'in kind' return (free rent) will not pass any IRS regulation for donations.

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codeman2828OP​•

I dont know where you got the idea of free rent…? The church is already renting land I own to farm it and give food away and sell. They would be making a capital improvement to the property in lieu of paying rent and that capital improvement is less than what they would pay over a 5 year period and it would save them money by not having to pay city water bills.

How am I getting free rent? If anything I’m getting less money out of the deal if they drill a well.

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codeman2828OP​•

Yeah so I guess my question is this. If I were to straight up sell House A there would be capital gains but would I still pay the capital gains if all of the money was donated to a 501c3? Or would it be better to sell House A to the church for exactly what I paid?

The reason for asking is should I bother switching the property into the churches name or just sell it myself.

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gobeavs1231​•

You don’t get to decide the value of your house when you donate it. When you donate an asset valued over $5,000 you have to pay for an appraisal per IRS regulations. The appraised value would be your tax benefit. The church can then do whatever they want with the house including selling it.

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codeman2828OP​•

Would I need to pay capital gains on the house if I sell it then donate all of the cash?

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gobeavs1231​•

Yes, you would since they are two separate transactions. Donating the property could be a great idea win for you and the church, and getting a tax benefit for the appraised value will benefit you. Although you should check with a CPA since I’m not one

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heyitsvibes​•

If you want them to receive cash, you might want to first sell the property yourself and write them out how much you’d like to give them. Otherwise the matter will end up out of your hands and the house may remain unsold for some time

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7lexliv7​•

This strategy loses all of the tax benefits of donating appreciated assets

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heyitsvibes​•

Thanks for teaching me something today! Glad to know that

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