Worth a Look: Charitable Gifts of Real Estate on the Outer Banks

Real estate is at the heart of life on the Outer Banks. As a resort community, so much of our local economy—and so many personal stories—are tied to land, homes, and vacation properties. For generations, families have built livelihoods and wealth by accumulating and stewarding property here. Given that history, it’s not surprising that some of the most transformational gifts to the Outer Banks Community Foundation have come through donations of real estate, made either during a donor’s lifetime or as part of an estate plan.

If you work with philanthropic individuals and families, you’re likely aware that real estate can be a powerful tool for charitable giving. Real estate is the largest asset class in the world, yet industry sources estimate that only about 3% of charitable giving involves gifts of real estate. These gifts are often overlooked, in part because the rules and process can feel complex—and because property is deeply personal. For many people, letting go of a home or parcel of land can be an emotional decision.

That may begin to change as ownership of real estate shifts rapidly during the largest transfer of wealth in our nation’s history. Trillions of dollars in property are expected to pass to Gen X and Millennial heirs in the coming decades. As more families hold significant wealth in real estate rather than cash, charitable giving will increasingly involve non-cash assets, particularly appreciated property. At the same time, many owners are reassessing properties they already hold—especially vacation homes that once felt like a dream but now feel underused, expensive, or burdensome. Against this backdrop, charitable gifts of real estate can offer a meaningful, tax-efficient way to support the Outer Banks community.

Here are a few key points to keep in mind:

• Potential tax benefits. Gifts of long-term capital assets, including real estate held for more than one year, are generally eligible for a charitable deduction based on the property’s fair market value, rather than its original purchase price, when donated to a public charity.
• Community foundation flexibility. Real estate can be donated to a donor-advised fund or other charitable fund at the Outer Banks Community Foundation. Because the Foundation is a public charity, the property can be sold and the proceeds placed into a charitable fund without triggering capital gains tax. This allows a donor to convert an illiquid or challenging asset into a flexible resource that can support the causes they care about on the Outer Banks—now and in the future.
• Early coordination matters. Before moving forward with a gift of real estate, we encourage donors and their advisors to connect with the Foundation team. We can help evaluate the viability of the gift, coordinate next steps, and discuss fund options that align with the donor’s charitable goals.
• Important considerations. Properties must generally be free of debt, such as mortgages, to avoid complications. Other factors—such as depreciation recapture, unrelated business income tax, or environmental due diligence—may also need to be evaluated.
• Documentation is critical. As with any illiquid asset, proper process matters. Donors must obtain a qualified appraisal to establish fair market value, complete IRS Form 8283, and transfer the property using appropriate legal documents, including a deed.
• Timing and intent. It’s important that a property not be subject to a prearranged sale prior to donation. Even informal discussions can create issues under IRS rules governing anticipatory assignment of income.

About the Outer Banks Community Foundation: The Outer Banks Community Foundation is a 501(c)3 nonprofit organization committed to fostering philanthropy and supporting local causes. Through its charitable funds and grant programs, the Foundation strives to enrich the quality of life for residents of the Outer Banks.