Donating Real Estate to the Church
You have owned the rental property for decades. The tenants have changed many times, the roof has been redone twice, and some mornings, you wonder whether managing it is still worth the trouble. You have thought about selling it and giving some of the proceeds to your parish, but you have also heard there might be a way to give the property itself. Nobody in your family has done this before, so you are not sure where to start.
What Most Families Never Learn
What surprises most people even more is that the Church can actually accept a building donation. In the fiscal years 2025 and 2026, The Orange Catholic Foundation (OCF) received three property gifts with a combined value of $3.4 million.
A property, like appreciated stock, can often be given directly rather than sold first. When you transfer real estate you have owned for more than a year to OCF, you generally avoid capital gains tax on the appreciation, and your deduction is typically based on the property's full fair market value. Selling the property yourself and giving the proceeds usually leaves less for your parish or school and more for the IRS.
How a Real Estate Gift Actually Works
A property gift moves slower than a stock gift, and it should. The asset is larger, the diligence is more involved. OCF has an obligation to understand exactly what it is accepting before it accepts it.
- You start the conversation with OCF, describing the property, how you hold title and any mortgage or lien against it.
- OCF conducts an environmental review and a title review before accepting the property. This protects you and it protects the Foundation, since neither of you wants a hidden liability attached to the gift.
- Because the property's value almost always exceeds $5,000, you will need a qualified appraisal to support your deduction. Your accountant will file Form 8283, Section B, with your return. If your accountant wants the full detail, IRS Publication 561 explains how the appraisal itself should be conducted.
- Once OCF accepts the property, ownership transfers and OCF is responsible for managing or selling it going forward and directing the proceeds to the fund or ministry you named.
Expect the full process to take sixty to ninety days from your first conversation to closing. That is longer than a stock transfer, and it is worth planning for rather than being surprised by it.
Here is a hypothetical example to make the numbers concrete. Say you hold a rental property worth $500,000 that you purchased decades ago for $100,000. If you transfer the property directly to OCF, you generally avoid capital gains tax on the $400,000 of appreciation, and your deduction is based on the appraised fair market value of $500,000, subject to the 30 percent of adjusted gross income limit that applies to gifts of long-term appreciated property, with any unused amount carried forward for up to five years. If you sold the property yourself first, you would owe capital gains tax on the $400,000 gain before a dollar reached the parish. Your specific result depends on your basis, your mortgage position and your income. Review the details with your accountant and attorney before you begin.
"Is the Church Really Equipped to Take On a Property?"
This is the question almost every family asks, and it deserves a direct answer. OCF does not accept every property offered to it. Some properties carry environmental issues, unresolved title problems or a use that does not fit what the Foundation can responsibly manage. OCF will tell you honestly if that is the case for yours. What OCF will not do is accept a property sight unseen or promise acceptance before the review is complete.
For properties that do move forward, OCF has the systems in place to manage the transition. From title transfer through eventual sale or continued use, OCF will keep you and your advisors informed at each stage. The review process is not an obstacle. It is the reason a gift like this can be trusted to work as intended.
Your own attorney and CPA have a real role here too. A property gift touches title work, mortgage payoff or assumption and appraisal timing. Coordinating those pieces with your own advisors from the start, rather than after OCF has begun its review, tends to shorten rather than lengthen the process. Our Professional Advisor resources describe how OCF works alongside the professionals you already trust.
What a Gift of Property Sustains
A property gift tends to be large enough to fund something specific and lasting. It can establish or grow a named endowment, support a scholarship fund for Catholic school students or provide steady income toward priest retirement or seminarian formation for years after the property itself is gone. Ways to Give describes the specific funds and ministries a gift like this can support.
If you have a sibling or a friend from the parish who has mentioned the same question about a property they own, this is worth a direct conversation with them. Most people only learn that this option exists from someone who has already been through it.
Your Next Step
A real estate gift takes longer than most people expect, so the earlier you start the conversation, the more comfortably it fits your timeline. Schedule a meeting with The Orange Catholic Foundation to describe your property and ask what the review process would look like for it or call 714-282-3021. If you are also weighing a gift of stock or another asset alongside the property, donating stock to charity covers how that process compares.
Disclaimer
This information is intended to be general in nature and is not offering professional tax, legal or accounting advice. Please discuss your philanthropic giving with your accountant or other professional advisors. The Orange Catholic Foundation is a 501(c)(3) charitable corporation, Tax ID 33-0934571.
Frequently Asked Questions
Does giving real estate to the Church avoid capital gains tax the same way giving stock does?
Generally, yes. When real estate held more than one year is transferred directly to a qualified charity, the donor typically does not recognize the capital gain on the appreciation, and the deduction is usually based on the property's appraised fair market value. Your specific result depends on your basis, any mortgage on the property and your income. Confirm the details with your accountant before you begin.
Do I need an appraisal to donate real estate?
Yes. Because real estate gifts almost always exceed $5,000 in value, a qualified appraisal is required to support the deduction. Your accountant will file Form 8283, Section B, with your return. OCF can point you toward the documentation it needs once a property moves into formal review.
What kind of property will OCF actually accept?
OCF reviews each property individually, including its title, any environmental concerns and how it can realistically be managed or sold. A property free of liens and environmental issues typically moves through review more quickly, but OCF makes that determination case by case rather than by a general rule. The Foundation will tell you directly if a property is not a fit.
How long does a real estate gift take from start to finish?
Plan for sixty to ninety days from your first conversation with OCF to closing, since environmental review, title review and appraisal all take time. Starting the conversation well before you need the gift finalized gives everyone room to do that review properly.
