The usual disclaimer, meant sincerely: partial donations sit at the intersection of tax law, county land-use rules, and appraisal practice. This page explains the general framework; your CPA should bless the numbers before you act.
The core move: sell 95, donate 5
Suppose you’re selling a large parcel — retiring from farming, exiting an investment, or liquidating inherited acreage. The sale will produce a substantial capital gain, and with it a substantial tax bill. Before the sale, you split off a portion — five acres, a back section with no road value, the slice a developer doesn’t want — and donate it to a 501(c)(3). The donation generates a fair-market-value deduction that lands on the same tax return as the gain.
Here’s the part that surprises people: the sale actually makes the deduction more usable, not less. Deductions for appreciated land are capped at 30% of your adjusted gross income per year — and the gain from selling the 95 acres inflates that year’s AGI, raising the cap precisely when you need it. A deduction that would take three carryforward years to absorb in an ordinary year can often be used at once in a sale year.
Worked example
A retiring owner sells 95 acres for a $400,000 gain and donates a 5-acre slice appraised at $30,000, all in the same tax year. The sale pushes AGI to roughly $500,000, so the 30% cap ($150,000) absorbs the whole deduction immediately. At a 35% marginal rate, the donation saves about $10,500 in federal tax — and the donated slice generates no gain of its own, because donated land is never sold by the donor. Net effect: the owner gave up land worth $30,000 that a buyer didn’t particularly want, and got back roughly a third of it in tax savings plus a clean, faster sale of the remainder.
The sequencing rule that makes or breaks it
Donate before the sale is locked in. If the land — including the slice — is already under a binding contract when you donate, the IRS can treat the gain as yours under the assignment-of-income doctrine, erasing the strategy’s benefit. The clean pattern: split and donate first, then list or close on the remainder. Planning the donation at the same time you engage a surveyor or listing agent, rather than at closing, keeps everything on the right side of the line.
The mechanics of splitting a parcel
- Lot split / subdivision approval. The donated slice must become its own legal parcel with its own deed. Rural counties often approve simple splits quickly; others require surveys, hearings, or minimum acreage. We check your county’s process during the free review.
- Survey costs. Typically the donor’s, and typically modest relative to the tax savings on parcels where this strategy makes sense.
- Qualified appraisal. The donated slice needs its own appraisal for deductions over $5,000 — the standard rules apply to the part just as they would to the whole.
The inherited-acreage version
Inherit 100 acres and the calculus shifts, because inherited land arrives with a stepped-up basis — little built-in gain. But the carrying costs arrive immediately: property taxes on the full acreage, every year, whether you visit or not. Donating a slice produces a deduction that can exceed several years of property taxes on everything you kept, trims the ongoing bill, and — if you later sell the rest — pairs with that sale under the same-year math above. For heirs splitting land three ways who agree on nothing else, carving off a donated portion is also a proven way to settle the “what do we do with it” argument.
A word on bargain sales and easements
Two related structures exist. A bargain sale — selling the property to the nonprofit below market and deducting the difference — is legitimate but allocates your cost basis pro-rata between the sale and gift portions, so some gain is still recognized; it wants a CPA’s hand on it. Conservation easements (donating development rights while keeping the land) are real but heavily audited after years of abuse by syndicated promoters — if an easement fits your land, work with a specialist attorney, not a promoter promising outsized deductions. For most owners, the straightforward split-and-donate above does the job with far less complexity.
Where to start
Tell us about the parcel in the two-minute form and note that you’re considering a partial donation — include the county and what you plan to do with the remainder. We’ll map the lot split feasibility and timeline in the free review, and the broader offset math is covered in our capital-gains offset guide.