Commercial Real Estate

Commercial Real Estate may either be given outright to a charitable institution or used to fund other charitable planning tools. (see list at bottom of page) Often commercial real estate has appreciated significantly in value or depreciation expenses have been recorded creating significant built-in-gain. In either case there would be significant capital gains taxes if it were to be sold. However, when it is given to a charity there will generally be no tax due and tax deductions are available with most charitable planning tools.

Is this right for me?

Do I have genuine charitable intent? - yes

Do I own commercial property that is debt free? - yes

Is the basis of the property significantly lower than its market value? - yes

Should the real estate be retained as part of an ongoing business? - no

If your answers agree with those above, then a gift funded with commercial property my be appropriate for you.

How Do I Make a Gift of Commercial Real Estate?
Not all institutions are equipped to accept direct gifts of commercial property. Those who are equipped to receive the property will generally wish to evaluate it beforehand. If you wish to make a direct gift, you should contact the charity you wish to benefit and ask how they would like to proceed.

For tax purposes, you must obtain your own appraisal to determine the fair market value you claim on your income tax return. Your tax return must include IRS form 8283 signed by your appraiser.

Commercial property can also be given by funding a Charitable Remainder Unitrust that provides you income for life and numerous tax benefits. Commercial property can be used in conjunction with a Charitable Lead Trust to provide annual income to the charities you wish to benefit for a period of years, following which the remainder is transfered to your chosen beneficiary or beneficiaries. (for more information please click on the Charitable Lead Trust link). Commercial property can also be given through your Will or Revocable Trust.

You should speak with your legal and financial advisors who are a part of your charitable planning team to discuss the plan that best matches your goals. They should be informed of any intention you have of using commercial property to fund a gift. They will want to be sure that the gift does not result in Unintended Business Taxable Income (UBTI) to the charity or charitable planning tool.

Tools Used With This Asset (Commercial Real Estate)