How much can I deduct each year and for how many years on property apprased at 225K when AGI is 140K?

[DoninGA]

What do you mean deduct each year on a property?  What type of property?  Personal use or a rental?  Land?

[jjj7527]

I have rental property that I have owned for 10 years. It is paid for. A recent appraisal is for $225,000. I plan to give it to a charity in early January. Can I spread that deduction over 7 years? I know that I can donate half of my AGI of $140,000. May taxable income is only $76,00.

[jjj7527]

I'm giving a home(rental) worth $225,000. Can I spread that deduction over several years?

[DoninGA]

@Carl  or @Opus 17 - Would you care to comment on this post

[Opus 17]

As far as I know you can't spread a gift out.  There may be some tricky strategies with donor-advised funds or something else, that are beyond the scope of this forum.

Since this is capital gains property that has increased in value, your deduction is limited to 30% of your adjusted gross income (assuming you are donating to a "50% charity").  Any amount over 30% is carried over to next year.  You must deduct the maximum allowed amount each year, you can't pick and choose how to deduct the donation.

[Carl]

I'm not all that familiar enough with the donation of depreciable business property to be able to provide any useful input here. I know it's not as simple as it may seem though, as the depreciation has to be accounted for. Usually though when gifted, the depreciated part is gifted too, meaning the recipient of the gift will have to recapture and pay tax on that depreciation upon disposition.  How that's dealt with by a qualified charity is beyond my scope of knowledge on this.

[Opus 17]

The more I think about this the more I think you should consult with a tax professional (not a storefront seasonal tax preparer.)

The problem is the difference between "ordinary income property" and "capital gains property" as defined on page 11 of publication 526.  https://www.irs.gov/pub/irs-pdf/p526.pdf

Real estate held more than 1 year is capital gain property, except when it is income property.  And income property includes rental property, except when it is capital gains property.  I'm a bit confused.  And your situation is not quite normal because you say the FMV when you inherited it is the same as the FMV now, so you don't actually have a capital gain other than that due to depreciation, which is ordinary income.

I think this means that your only deduction allowed is the current depreciated value of $155,000.  (You already deducted the other $70,000 over the last 10 years of renting.)  Because you don't have a capital gain (other than depreciation) you can deduct the $155,000 using the 30% rule for 50% charities; e.g. $38,000 per year for the next 4 years.

But you should see a pro.