Real Estate & Gifts of Grain

Giving Real Property

If you are looking for other ways to support the Church beyond writing a check or using a credit card, you have come to the right place! Below is one of the many SMART WAYS to give that may work better for you and ensure the good works of the Church for a brighter future!

Real estate is an often overlooked asset when it comes to giving. There are several potential reasons for this:

  • People tend to think of more liquid assets when they consider giving.
  • Donors often don't realize they can donate real estate to charity.
  • If they do know, they believe it's prohibitively complex to carry out.

But the benefits of donating real estate to charity are significant, and it’s well worth taking the time to understand how the process can work for you. There are many types of real estate that can be donated to charity. From undeveloped land to commercial buildings, almost any type of property can be donated. Once the real estate has been gifted, the decision on how to use donated real estate is endless. Types of real estate you can donate:

  • Rental properties
  • Commercial buildings
  • Vacation homes
  • Vacant lots
  • Historic structures
  • Apartment buildings
  • Farmland

4 benefits of donating real estate to the Diocese of Toledo

There are several major benefits of donating real estate to charity, ranging from the strictly financial to the more personal side of the coin. Here are the top four:

1. Eliminate capital gains tax on the property’s growth in value

If you were to sell the property instead of donating it, the increase in property value since you bought it would likely be subject to capital gains tax. Since assets donated to the Diocese of Toledo aren’t subject to capital gains tax, this is a way to make sure that a larger portion of the proceeds go to the Diocese of Toledo.

2. You may deduct the property’s value from your taxable income

You can deduct the property's fair market value from your taxable income—generally up to 30% of your adjusted gross income. This can bring meaningful savings, especially if the property is worth a significant amount of money.

3. Donating can simplify your estate plan

A donation of real estate can be a great way to simplify your estate plan. When you donate real estate, you remove it from your estate. helping to reduce your estate tax burden on your heirs.

4. Kick-start a multi-year charitable legacy

Because real estate is usually valuable, donating it can be a tax-efficient way to begin a long-term charitable journey. Proceeds can be used to fund charitable organizations as donors see high-impact opportunities, potentially over many years.

- Smart Gifts! Make sure that donating real estate is the right decision for you by considering the following:

  • Complete the necessary documentation for your charitable tax deduction
  • Donate a debt-free property to avoid capital gains taxesDon't donate property with debt. If you do, it might lower the value of your charitable deduction and the IRS may deem it a "bargain sale," in which you might be subject to some capital gains tax.
  • Donate marketable real estate
  • Property that is a good candidate for donation should be debt-free and also easy to market and liquidate. Marketability is important because the charity may not want or need the property and will likely want to sell it quickly.
  • Avoid prearranged sales
  • If you have a pre-existing agreement to sell the property before donating it to the charity, the IRS might see your donation as an "anticipatory assignment of income" to the charity. You then may be subject to capital gains taxes.

- Smart Gifts! Consult with your financial advisor

You may consider consulting with a financial advisor and tax specialist to come up with a comprehensive charitable giving plan that's right for you. While donating real estate is easier than you might think, a financial advisor may give you personalized guidance for your tax situation.

- Smart Gifts! Donating real estate to charity directly

Depending on the needs of the Diocese, the property and/or the economic market the Diocese of Toledo may be able to accept gifts of real estate directly. If they accept real estate donations, they will often sell the property and use the proceeds to fund their programs. Some might keep the property to generate income or use it for operations.

Gifts of Grain

Maximize your tax benefits while supporting your Catholic faith

The Diocese of Toledo is pleased to make our parishioners who are agricultural producers aware of the tax savings available when charitable gifts are made using commodities. Replacing the cash donations you give each year with gifts of grain can increase the amount of tax savings that you realize through charitable giving. There are two reasons for this:

Giving a commodity means this is a sale that your business never realized. This income will not be recorded on your taxes and you will also save the money that you would have paid in self-employment tax on that amount.

- Smart Gifts! Donating to maximize your impact

By providing a gift of grain to the Diocese of Toledo, you are maximizing your impact while minimizing the tax consequences of the grain that you've donated. Your crops are the result of the hard work you've invested in your farm operation. By providing a portion of what you've grown to the Diocese of Toledo, you're investing in the future of our faith, and create a legacy that will sustain our 19 counties for generations to come.

- Smart Gifts! Gifts of grain made simple

Choosing to donate a gift of grain to the Diocese of Toledo is simple.

To ensure compliance with tax laws, farmers wishing to donate a commodity should follow these steps:

Notify the Office of Mission Advancement for the Diocese of Toledo of your intended gift by phoning or writing us. Describe what the commodity is and the quantity being contributed. Retain a copy of the letter for your records. (The gift should be from unsold crop inventory with no sale commitment made prior to the gift.)

Transfer the grain as a gift to the Diocese of Toledo by having the elevator send a warehouse storage receipt to the Office of Mission Advancment. The elevator's receipt must show the Diocese of Toledo as the owner of the grain.

Important: please notify the Diocese of Toledo when you have delivered the grain to the elevator.

The Diocese of Toledo will provide you with a donation receipt for your gift. Do not report the donation on your tax forms as you are not entitled to any additional deduction. The tax benefit comes from deducting your production expenses as usual and not reporting the sale on Schedule F.

The Diocese of Toledo will sell the grain and receive the sale proceeds. Any sales invoice will name the Diocese of Toledo as the seller of the grain. Per Internal Revenue Service (IRS) rules, it is necessary that the charity had 'dominion and control' of the commodity.

Here is an illustration of how giving through a gift of a commodity can reduce your tax obligation.

Freddie and Frieda Farmer normally make $10,000 in annual contributions to their favorite local charities. This year, they chose to give this amount by giving 2,000 bushels of corn when the market price is $5.00 per bushel. When they deliver the corn to the elevator, they advise the elevator they want to give the grain to five qualified (tax exempt) charities. Assuming the couple has a taxable income of $100,000, the following tax savings will apply:

Assuming the Farmers have not exceeded the maximum self-employment tax limit, they will save 15.3%, or $1,530 of self-employment tax.

They will save 22%, or $2,200 of federal income tax and 8.53%, or $853 of state income tax.

The total tax savings from the gift of the corn is $4,583. If they are able to itemize, the only savings from $10,000 of cash gifts would be $2,200 of federal income tax and $853 of state income tax. If they are unable to itemize on their tax return, they would not recognize a tax savings by making a cash gift.

Each agricultural producer's situation is different. Please consult your professional tax advisor on whether using a gift of grain can benefit you. Some agricultural entities may not benefit from gifts of grain because they are not treated the same way from a tax perspective, for instance, this may include crop share agreements and C-corporations.

Disclaimer: This content is for informational purposes only and does not constitute legal or tax advice. Please consult your professional advisor for legal and tax advice specific to your situation.

Gifts of Grain serve as a way for agricultural producers to maximize tax benefits while supporting the Diocese of Toledo.

Contact the Office of Mission Advancement or at 419.214.4951 to learn more about how you can give the gift of future support and create your legacy within the Diocese of Toledo and our Catholic community.