Worth a look: Charitable gifts of real estate

by SCF Team | February 17, 2026 | Siouxland Community Foundation Blog, Advisor Resources

Real Estate Gifts: Underused, Complex, and Increasingly Relevant

If your client base includes philanthropic individuals and families, you’re likely aware that gifts of real estate can be used to support charitable giving. Real estate is the largest asset class in the world, yet various industry sources suggest that only 3% of charitable giving involves gifts of real estate. That gap is not surprising. Real estate gifts are often overlooked because the rules and process can be complex, and many clients struggle emotionally with the idea of parting with property.

That may begin to change in the coming years. Real estate ownership is shifting rapidly as part of a major transfer of wealth. Gen X and Millennials are expected to inherit trillions of dollars in real estate, and that transition has significant implications for charitable giving. As more families hold wealth in property rather than cash, philanthropy will increasingly involve non-cash assets, especially appreciated real estate.

At the same time, many clients are rethinking properties they already own, particularly vacation homes that once felt like a dream but now feel underused, costly, or burdensome.

Given these dynamics, it is important to understand how real estate can be repurposed to support charitable goals in a tax-efficient way. Here are six points to keep in mind:

1. Fair market value deductions may apply

Gifts of long-term capital assets, including real estate, are typically eligible for a charitable deduction based on the property’s fair market value, rather than its original cost, when given to a public charity. This benefit generally applies only to property held for more than one year, so it is important to confirm long-term capital asset status.

2. Real estate can fund a donor-advised fund

Clients can donate real estate to a donor-advised fund or other fund at the community foundation. Because the community foundation is a public charity, the property can be sold and the proceeds can flow into the fund without triggering capital gains tax. This strategy can turn an illiquid or burdensome asset into a flexible charitable resource that supports favorite causes over time.

3. Involve the community foundation early

Before your client begins the process of gifting real estate, reach out to the Siouxland Community Foundation. Our team can help evaluate the viability of the gift and coordinate details, including which type of fund or funds should receive the proceeds based on the client’s goals.

4. Watch for common complications

Real estate gifts require careful review. Key issues include whether the property is encumbered by a mortgage or other debt, whether depreciation recapture or unrelated business income tax could apply, and whether environmental due diligence is necessary.

5. Documentation matters

As with any illiquid asset, the process must be handled correctly. The donor must obtain a qualified appraisal to establish fair market value and report the gift on Form 8283. The transfer must also be completed with appropriate legal documentation, including a deed.

6. Avoid prearranged sales

Advisors should ensure the client has not prearranged a sale of the property, even informally. Doing so could jeopardize the deduction under the IRS anticipatory assignment of income rules or the step transaction doctrine.

Although the technical requirements can seem daunting, the potential payoff is substantial for both your client and the community. The Siouxland Community Foundation is here to help with the charitable aspects of complex gifts, and real estate is no exception. We look forward to working with you and your clients to transform real estate into a powerful tool for lasting charitable impact.