January 22, 2024 | Alexa Johnson
The Benefits of Donating Land to Charity
Maximize Your Impact – One of the main reasons you should donate your land to charity is because it allows you to maximize the impact your gift has. The entire point of contributing to charities and nonprofit organizations is to help them fulfill their missions and continue to carry out their crucial work.
Charities always need monetary contributions in order to carry out their work, but certain nonprofit organizations can benefit from land donations even more. This is because the land can be used by the organization as part of its operations, or it can be sold by the organization for more money than if you had sold it yourself and given the organization the proceeds, this being due to the potential elimination of capital gains tax.
Capital gains tax is incurred when an individual’s non-cash assets—like stocks, bonds, and real estate—have appreciated (gained value) and are then sold. The amount of tax that must be paid depends on how much the asset appreciated during the time you owned it, and can be as high as 20%. So, if you sell your land and then donate the proceeds to a nonprofit organization, you may be giving them up to 20% less value than if you had just donated the land directly.
By donating the land directly, the organization can either keep it for its operations or sell it for its full value, which can support their work even more. For more information regarding non-cash donations, visit the Internal Revenue Service’s (IRS) website.