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Know the true tax value of land

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in Small Business Tax

Q. I read your article on land easement donations. Is a regular donation of land to a 50% charity limited unless you choose to deduct the value of the original cost? A.B., via email

A. Yes. Generally, annual charitable deductions can equal up to 50% of your adjusted gross income (AGI). Deductions for gifts of capital gain property like real estate may be based on fair market value but can’t exceed 30% of AGI. However, gifts of real estate limited by the 30%-of-AGI cap may be carried over for up to five years. Thus, it generally would not make sense to claim a deduction based on original cost if you qualify for the deduction based on fair market value.

Tip: The deduction based on fair market value generally applies to capital gain property held longer than one year.

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