Donating Real Estate to Charity: Deduction Limits and Appraisal Rules

Donating real estate to charity can produce a tax deduction equal to the property’s fair market value, up to 30% of your adjusted gross income each year, with any excess carried forward for up to five years. To claim it, you need a qualified appraisal, a written acknowledgment from the charity, and a completed Form 8283 attached to your return. The rules are unforgiving: a missing signature or a late appraisal can wipe out the deduction entirely, even when the gift itself is legitimate.

How Much You Can Deduct

If you’ve owned the property more than a year, it counts as long-term capital gain property, and your deduction is based on fair market value on the date of the gift. Own it a year or less, and you’re limited to your adjusted basis, which for most donors is roughly what they paid.

Fair market value is what a willing buyer and willing seller would agree on with neither under pressure. Get this number right. Overstate it and you face penalties; understate it and you leave money behind.

AGI Ceilings

The IRS caps your deduction as a share of adjusted gross income, and the applicable percentage depends on both the property type and the recipient:

30% of AGI for appreciated real estate held more than a year, donated to a public charity.¹
20% of AGI for the same property donated to a private non-operating foundation.¹
50% of AGI is available if you elect to reduce your deduction from fair market value down to your adjusted basis. The trade is a smaller deduction for a higher ceiling, which can make sense when the property hasn’t appreciated much.¹

The 50% election, once made, applies to all capital gain property contributions you make that year. You can’t pick and choose which gifts get the higher ceiling.

Five-Year Carryover

Amounts above the annual ceiling aren’t lost. You carry the excess forward for up to five more tax years, subject to the same percentage limits each year.¹ Current-year gifts always get priority over carryovers, so a large new donation pushes older excess further down the queue. Anything unused after five years is gone.

You Have to Itemize

None of this works unless you itemize on Schedule A instead of taking the standard deduction.² For 2026, the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly.³ A real estate gift large enough to hit the AGI ceiling will almost always clear the itemizing threshold, but confirm before you commit.

Which Charities Qualify

The recipient must be a qualified organization, generally one recognized under Section 501(c)(3).⁴ Verify the organization’s status through the IRS Tax Exempt Organization Search before you transfer anything.

The line between a public charity and a private non-operating foundation matters because it drops your ceiling from 30% to 20% of AGI. Same property, different recipient, different result.

The Qualified Appraisal

Any real estate donation valued above $5,000 requires a qualified appraisal, which covers essentially every real estate gift. The appraisal must meet specific IRS standards on timing, content, and preparer credentials.⁵

Timing

The valuation effective date must fall no earlier than 60 days before the contribution and no later than the contribution date itself. You must have the completed appraisal in hand before the due date, including extensions, of the return that first claims the deduction. Late appraisals disqualify the deduction.

Who Counts as a Qualified Appraiser

Not every licensed appraiser meets the IRS definition. The appraiser must either hold a professional designation from a recognized appraisal organization, such as MAI from the Appraisal Institute or ASA from the American Society of Appraisers, or have completed relevant college-level coursework plus at least two years of experience buying, selling, or valuing the specific property type. They must regularly perform appraisals for pay, and they cannot have been barred from practicing before the IRS in the three years before the appraisal.⁵

The report must include a declaration describing the appraiser’s education, experience, and memberships. It must also follow the Uniform Standards of Professional Appraisal Practice (USPAP). Hiring someone without the right credentials is one of the fastest ways to lose the deduction.

Appraiser fees cannot be contingent on the value reached. That’s a prohibited fee arrangement, and it disqualifies the appraisal.

The Paperwork That Has to Be Right

Courts have upheld disallowances for paperwork failures even when the gift was real and the value was accurate. Three documents matter most.

Written Acknowledgment from the Charity

For any contribution of $250 or more, you need a contemporaneous written acknowledgment from the receiving organization, in hand before you file the return.⁶ It must describe the property and state whether the charity gave you anything in exchange. If nothing changed hands, the letter has to say so explicitly. If the charity gave you something of value, your deduction drops by that amount.

Form 8283, Noncash Charitable Contributions

Any noncash donation above $500 requires Form 8283.⁷ Real estate almost always clears that bar. Above $5,000, you complete Section B, which needs three separate signatures:

Your own information in Part I: a description of the property, contribution date, acquisition date and method, adjusted basis, and appraised fair market value.
The appraiser’s declaration in Part III, attesting to the valuation and their qualifications. This signature carries legal weight and exposes the appraiser to penalties for overstatements.
The donee acknowledgment in Part IV, where the charity confirms it received the property on the stated date. That signature is not agreement with your valuation.

Attach Form 8283 to the return that first claims the deduction. If the deduction carries over, attach the form again in each carryover year and note the carryover status. Missing signatures give the IRS grounds to disallow the deduction outright.⁸

Schedule A

The allowable deduction, after applying the AGI limits, goes on Schedule A of Form 1040.⁹ The contribution date should match across Schedule A, Form 8283, and the appraisal.

Partial Interests and Conservation Easements

The IRS generally does not allow deductions for donations of partial interests in property. You can’t donate a 50% stake in a building and deduct that share’s value. A rent-free lease of property to a charity, for instance, is a partial interest contribution that generates no deduction at all.¹⁰

There are three narrow exceptions:

A remainder interest in a personal residence or farm, where you transfer ownership but keep the right to live there or farm it for life or a set term. The deduction equals the present value of the charity’s future interest.
A qualified conservation contribution, which permanently restricts development, protects a recognized conservation purpose, and lasts forever.
An undivided portion of your entire interest, meaning a fractional share such as one-third that applies to every right you hold in the property.

Conservation easements have drawn heavy IRS scrutiny, especially syndicated transactions. A qualified conservation contribution requires a qualified real property interest, a qualified organization, and an exclusively conservation purpose protected in perpetuity by legally enforceable restrictions.¹¹ Expect the appraisal and the claimed conservation purpose to be examined closely.

If the Property Has a Mortgage

Donating encumbered property is not a pure gift. The outstanding debt is treated as an amount you realized from a sale, even if the charity never formally assumes the loan.¹² The IRS calls this a bargain sale: part sale, part gift.

Your charitable deduction equals the property’s fair market value minus the debt. You also owe capital gains tax on the sale portion, calculated by allocating your basis between the gift and sale portions using the ratio of the debt to the property’s total fair market value.¹² Donors who miss this end up with a surprise tax bill next to their deduction. Paying off the mortgage before donating avoids the rules entirely when that’s feasible.

What Happens After You File

If the charity sells, exchanges, or otherwise disposes of the property within three years, it must file Form 8282 with the IRS within 125 days and send you a copy.¹³ The form reports the sale price. A large gap between that price and your claimed fair market value is one of the more common audit triggers for real estate donations. It doesn’t automatically invalidate the deduction, since appraised value reflects the contribution date and markets shift, but expect questions.

Penalties for Overstating Value

Valuation accuracy is enforced with two tiers of accuracy-related penalties:

A substantial valuation misstatement, meaning a claimed value of 150% or more of the correct value, triggers a penalty of 20% of the resulting tax underpayment.¹⁴
A gross valuation misstatement, meaning 200% or more of the correct value, doubles the penalty to 40%.¹⁴

These sit on top of the additional tax owed after the deduction is reduced. On a high-value property, the dollar amounts add up quickly.

Appraisers face their own penalties under Section 6695A, giving them a personal financial stake in getting the number right.¹⁵

You may avoid valuation penalties by showing you acted in good faith and with reasonable cause, which the IRS evaluates based on the effort you made, the complexity of the valuation, and your reliance on a competent advisor with all the facts.¹⁶ Hiring a qualified appraiser with genuine expertise helps establish the defense. Picking an appraiser known for aggressive numbers undermines it.

Costs to Plan For

Real estate donations carry out-of-pocket expenses that aren’t part of the charitable deduction. A qualified appraisal for a complex property can run several thousand dollars. Deed recording fees vary by jurisdiction, typically from about $15 to over $100. For commercial property or undeveloped land, the charity may require a Phase I Environmental Site Assessment before accepting the gift, commonly between $1,700 and $6,300 depending on the property’s size and history. Legal fees for the deed and transaction review add more. Some of these may be deductible as miscellaneous costs depending on the circumstances, but treat them as separate expenses when you’re deciding whether the donation makes sense.

1
Office of the Law Revision Counsel. 26 USC 170 – Charitable, Etc., Contributions and Gifts
2
Internal Revenue Service. Topic No. 506 Charitable Contributions
3
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
4
Internal Revenue Service. Exemption Requirements – 501(c)(3) Organizations
5
Internal Revenue Service. Publication 526 – Charitable Contributions
6
Internal Revenue Service. Charitable Contributions – Written Acknowledgments
7
Internal Revenue Service. Instructions for Form 8283
8
Internal Revenue Service. Instructions for Form 8283
9
Internal Revenue Service. Deducting Charitable Contributions at a Glance
10
eCFR. 26 CFR 1.170A-7 – Contributions Not in Trust of Partial Interests in Property
11
eCFR. 26 CFR 1.170A-14 – Qualified Conservation Contributions
12
eCFR. 26 CFR 1.1011-2 – Bargain Sale to a Charitable Organization
13
Internal Revenue Service. Charitable Organizations – Substantiating Noncash Contributions
14
Office of the Law Revision Counsel. 26 USC 6662 – Imposition of Accuracy-Related Penalty on Underpayments
15
Office of the Law Revision Counsel. 26 USC 6695A – Substantial and Gross Valuation Misstatements Attributable to Incorrect Appraisals
16
Internal Revenue Service. Penalty Relief for Reasonable Cause