Donate Commercial Property: Strategic Tax Planning Through Real Estate
Commercial real estate represents substantial value—and substantial tax planning opportunities. Business property donation provides exceptional tax advantages while supporting causes aligned with your values.
Why Commercial Real Estate Makes Strategic Charitable Gifts
Business property offers unique characteristics that make commercial real estate donation particularly advantageous. Commercial properties typically represent significant value—often millions of dollars. These large valuations translate to substantial charitable deductions that can offset high-income years or business sale proceeds.
Accumulated Depreciation Issues: You've likely claimed annual depreciation deductions reducing taxable income over years. But when you sell, you must recapture that depreciation at ordinary income tax rates (up to 37%), not lower capital gains rates.
For properties with hundreds of thousands in accumulated depreciation, this creates crushing tax bills. Donating commercial property eliminates depreciation recapture entirely—one of the most powerful tax advantages of charitable giving.
Commercial Property Donation Scenarios
Business Transition Planning
You're selling your business which owns the building. The business sale creates substantial taxable income. Donating the commercial real estate separately provides deductions offsetting business sale taxes.
Portfolio Restructuring
You've built a commercial portfolio over decades. Some properties no longer fit your strategy, but selling triggers massive capital gains. Donating select properties allows portfolio adjustment while avoiding taxes.
Obsolete Properties
Your commercial building has become functionally obsolete. Rather than deal with difficult sales or redevelopment, charitable donation provides exit strategy.
Powerful Tax Benefits Example
Office building purchased 2000 for $1.2M. Claimed $800K depreciation. Now worth $3.5M.
If you sell:
- • Capital gains tax: ~$460,000
- • Depreciation recapture: ~$296,000
- • Selling costs: ~$200,000
- Net: ~$2.45M
If you donate:
- • $3.5M deduction
- • Tax savings (37%): $1,295,000
- • Avoided taxes: $850,000
- Total benefit: $2.15M+
Types of Commercial Property Accepted
- • Office Buildings
- • Retail Properties
- • Industrial & Warehouse
- • Hospitality
- • Special Purpose Commercial
- • Mixed-Use Developments
Minimum values typically start at $250,000 due to transaction complexity.