The gift everyone thinks is easy
A client calls their wealth manager with what sounds like great news: "We want to give the beach house to charity." Big asset, big deduction, big impact. Everybody wins, right?
Maybe! Real estate is one of the trickiest gifts to donate to charity. Before I became an advisor, I spent 15+ years on the fundraising side, and I can tell you a property offer makes a nonprofit as excited as it makes them nervous.
Here are three myths that seem to seep through the world of charitable giving, plus a word on leaving property in a will.
Myth 1: "Any charity will be thrilled to get it"
Not always. Unlike other non-cash assets, a building comes with property taxes, insurance, upkeep, possible environmental issues, and the work of selling it. Unfortunately, many organizations simply aren't set up to receive these gifts, often because they don't have the staff or expertise to manage them.
Even when a charity says yes, it will almost always sell the property rather than use it. So, if a donor is picturing their home becoming a retreat center, that's a conversation to have with the charity early to see if that would be useful for them. And if there's still a mortgage on it, many charities will pass on a direct gift. There are ways to plan around debt, but they take time and the right team (more on that below).
Myth 2: "The mortgage doesn't matter"
It matters a lot! When a donor gives away property that still has a loan on it, the IRS treats the paid-off debt as if the donor sold part of the property. That's called a bargain sale, and it can create a tax bill nobody saw coming.
Here's the simple version: the deduction shrinks by the amount of the loan, and the donor can owe capital gains tax even though no cash changed hands. How much depends on what they originally paid for the property, which is exactly why the accountant needs to see it early. On top of that, many charities won't take on a mortgage at all, and debt on the property can be a real problem for a private foundation. It can still be a great gift. It just has to be planned that way from the start. IRS Publication 526 explains the rules.
Myth 3: "The appraisal is just a formality"
This is my favorite cautionary tale. A Sacramento real estate broker, who was also a certified appraiser, gave about $18.5 million of property to his charitable trust. No one questioned that the gift was real. He appraised the properties himself and filled out the IRS form without reading the instructions. The result? A deduction of zero. An independent appraiser later valued the properties at more than $20 million, but by then it was too late. Read the full story.
The takeaway is simple. Property worth more than $5,000 needs an independent, qualified appraisal and the right IRS paperwork. This is where you need the right team in place.
A few other things that change the math
Who receives it. The same property can be a great gift to a public charity and a disappointing one to a private foundation, where the deduction is usually limited to what the donor paid.
Timing. Donating a property that's already under contract to sell can leave the donor owing the capital gains tax anyway, so the gift needs to come before the deal.
The 2026 tax law. The One Big Beautiful Bill Act added a small floor on charitable deductions and trims the benefit for top-bracket donors (the Tax Foundation has a good summary).
Some property doesn't qualify. Donating a week at the vacation home isn't deductible, and timeshares can be hard to gift at all.
Your accountant can run the real numbers, and IRS Publication 526 has the details for anyone who wants to dig in.
What about leaving property in a will?
A bequest feels like the easiest option, but it can be an unwelcome surprise. If the charity isn't able to accept real estate when the time comes, it can turn the gift down. The property then goes wherever the rest of the will sends it, which may not be what the donor wanted. Meanwhile, the family keeps paying taxes and upkeep while it all gets sorted out. A bequest also generally doesn't give the donor an income tax deduction.
None of this makes a gift of property in a bequest a bad idea! It just means the conversation should happen while the donor is here to have it.
Alternative ways to donate real estate to charity
The good news is that real estate can still be a wonderful gift. A few paths worth exploring with the right team:
A retained life estate. Give the home now and keep living there for life.
A charitable remainder trust. The trust sells the property and pays the donor an income, with the rest going to charity.
Donor-advised funds and community foundations that specialize in real estate. They can often handle property a smaller nonprofit couldn't.
Selling first and giving the cash. Sometimes this is the simplest answer, especially if the property hasn't grown much in value or the charity can't take real estate. The trade-off is that selling first usually means paying capital gains tax on any growth, which giving the property directly can avoid. It's worth having your accountant compare both paths before the property goes on the market.
Who should be at the table
A real estate gift works best as a team effort. Each person has a lane, and no one person covers all of it:
Accountant or CPA: runs the tax numbers, confirms the cost basis, and handles the IRS paperwork.
Estate planning attorney: drafts the deed, trust documents, or will, and gets the timing of the transfer right.
Wealth manager: looks at how the gift fits the client's overall plan and income needs.
Qualified appraiser: provides an independent valuation the IRS will accept.
Philanthropic advisor: vets which charities can accept the gift, talks with the gift officer, and makes sure the donor's intent carries through.
Where I come in: As the philanthropic advisor on the team, I handle the charity side. I find out which charities can actually accept the property, talk with their gift officers before anyone gets attached to a plan, flag issues like a mortgage early, and keep the charity's paperwork on the same timeline as the appraiser and accountant. I spent 15+ years on the nonprofit side of the table, so I know exactly what they'll ask.
The bottom line
Real estate gifts can do enormous good. The best gifts start early, with the whole team at the table.
If you're a donor with property on your mind, or an advisor whose client just made "the beach house call," I'd love to help you think it through.
A quick note on my role: I don't manage assets, prepare taxes, or give legal advice. I work alongside your accountant, attorney, and wealth manager to handle the charitable side.
This post is for general education and isn't tax or legal advice. Every property and every family is different, so please work with your accountant and attorney on the specifics. Tax rules as of October 2026 are reflected in this piece.
About the author
Eva Fordham, MPA, CAP®, is the founder and principal of Expert Philanthropy, a Los Angeles-based philanthropic advisory firm serving individuals, families, and family foundations nationwide. Before launching her firm, she spent 15+ years in nonprofit fundraising. She works alongside wealth managers, estate planning attorneys, and CPAs to help clients give with confidence.