IRS Study Documents Increase in Real Estate Gifts

October 1, 2010

Starting with Tax Year 2003 the IRS has been producing reports called “Individual Noncash Charitable Contributions.”  IRS researchers have examined Form 8283 (Noncash Charitable Contributions) used to substantiate charitable deductions greater than $500 claimed on Schedule A (Itemized Deductions) of Form 1040.

In the spring of 2010 such a study was issued for the Tax Year 2007.  Here is a quick comparison of key real estate gift data from Tax year 2005 vs. Tax Year 2007.

What does this mean?

I think it means that in the middle of the decade the idea of real estate giving was grabbing hold.  Total real estate giving increased by over 30% during this period, with an especially dramatic increase (261%!) in the average size of the gift for donors 65 years and older.  This is especially significant, as a very high percentage of real estate giving comes from these older donors.

I predict that we will see a continuation of this trend once the IRS issues its report for Tax Year 2009.

When development officers tell me that real estate gifts are time consuming, sometimes complicated, and that some are pursued without ever making it to completion, I agree with all of this. But I point out: If the size of the gift is likely to be in the range of $400,000 or $500,000 or more, isn’t it worth a little investment of time and resources? Explain to me how this is a poor return on investment?

Here’s a link to the complete IRS Report: