How to Donate My House & Mortgage

Many charities can make great use of a home and the surrounding property.

Many charities can make great use of a home and the surrounding property.

For many people, their home is their largest investment, and donating this significant investment to a charity can provide the organization with much-needed property, as well as the opportunity to sell the property to gain money for the charity. Whether you've inherited a home you can't use, have an extra property you'd like to donate or simply want to sacrifice your own home for the well-being of others, donating your home can make a meaningful difference to a charity.

Talk to a financial officer with the charity about your intention to donate your property. Your mortgage isn't a donation; instead, it's a financial liability, so you'll need to ensure that the charity is willing to accept a home with a mortgage. The charity may also have paperwork it wants you to fill out containing information about your home, its estimated value and any requests you have for its use when you donate it.

Discuss how you want to handle the mortgage with the charity's financial officer. You have three available options. You can sign the deed over to the charity and continue to pay the mortgage, or you can refinance the loan in the charity's name. Refinancing will require that the charity pay the remaining balance on your loan, and will require a credit check and loan application. Finally, you can sell the home and give the proceeds to the charity.

Consult with a real estate attorney or financial planner, who can advise you of any concerns specific to your property. For example, if the property has code violations or is severely deteriorated you may need to draw up an arrangement with the charity that the property is donated "as-is." Draw up a contract with the charity that is specific to your needs. For example, if you're signing the deed over but plan to pay the mortgage, you'll need to specify this.

Request a receipt from the charity for your donation. Donations to 501(c)(3) nonprofits are tax deductible and can significantly reduce -- or even eliminate -- your tax liability. You must itemize this deduction on your tax return to receive the deduction.

Tips

  • Ensure that you're not underwater in your mortgage if you're planning to donate your house. Your donation will amount only to the equity in your home, so if there's no equity, the home could be an inconvenience to the charity rather than a gift.
  • By giving the property directly to a charity rather than having it sold and then donating the proceeds, you'll be able to avoid capital gains taxes.
  • You can also donate your property in your will after you die. Meet with an attorney who can help you draw up a will, and have the will signed by two witnesses as required by California law.
 

About the Author

Van Thompson is an attorney and writer. A former martial arts instructor, he holds bachelor's degrees in music and computer science from Westchester University, and a juris doctor from Georgia State University. He is the recipient of numerous writing awards, including a 2009 CALI Legal Writing Award.

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