Definition
In real estate, a donor is an individual or entity that transfers property or money to another party as a gift, without the expectation of receiving something of equal value in return. This transfer can take various forms, such as real estate, cash, or other valuable items. The act of giving by the donor can be motivated by altruism, tax benefits, or a desire to support a charitable cause.
Examples
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Charitable Donation of Property: Jane Smith donated a parcel of land she owned to an environmental conservation organization to help preserve the natural landscape. Jane, the donor, received a charitable tax deduction for the value of the land.
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Gifting Family Property: John Doe gifted a family vacation home to his daughter as a wedding present. John, the donor, transferred ownership without any financial consideration from his daughter.
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Endowment to a University: Michael Brown donated a commercial property to his alma mater to support its expansion projects. The university, as the recipient, benefited from the value of the gift, while Michael, the donor, gained tax advantages for his contribution.
Frequently Asked Questions
Q: What are the tax implications for a donor in real estate donations? A: Donors may be eligible for charitable deductions on their income tax returns if the property is given to a qualified nonprofit organization. The value of the deduction is generally based on the fair market value of the property at the time of the donation. However, certain rules and limits apply, and it is advisable to consult with a tax professional.
Q: Can a donor place restrictions on the use of donated property? A: Yes, a donor can place specific conditions or restrictions on how the donated property is to be used. These conditions must be agreed upon by the recipient at the time of transfer. Examples include stipulations for conservation use or restrictions against selling the property for a certain period.
Q: What is the difference between a donor and a grantor? A: While both terms involve the transfer of property or assets, a donor typically gives with no expectation of receiving something of equal value in return, usually as a gift or charitable contribution. A grantor, on the other hand, transfers property as part of a legal agreement, such as in a trust or deed transfer, which may involve formal consideration or compensation.
Related Terms
- Fee Simple: The most absolute type of property ownership, where the owner has unrestricted rights to use the property as they see fit, subject to law and regulation.
- Charitable Donation: A free transfer of property or assets made to a charitable organization, often with potential tax deductibility for the donor.
- Grantor: An individual or entity that transfers ownership of property through a trust, deed, or other formal legal instrument.
- Fair Market Value: The price at which property would sell under normal conditions in an open and competitive market, relevant in determining the value of donated property.
Online Resources
- Internal Revenue Service (IRS) – Donors and Charitable Contributions
- National Council of Nonprofits – Donating Non-Cash Property
- The Foundation Center – Online Resources for Donors
References
- Hoffman, William H., et al. “South-Western Federal Taxation 2021: Corporations, Partnerships, Estates & Trusts.” Cengage Learning, 2020.
- Brady, Jeff. “Federal Income Taxation of Individuals with Diagrams for Easy Understanding.” West Academic Publishing, 2013.
Suggested Books for Further Studies
- Katz, Stanley S., et al. “Charity, Philanthropy, and Civility in American History.” Cambridge University Press, 2003.
- Hopkins, Bruce R. “The Law of Fundraising.” Wiley, 2011.
- Fishman, Stephen. “Every Nonprofit’s Tax Guide: How to Keep Your Tax-Exempt Status & Avoid IRS Problems.” Nolo, 2020.
