I have a friend of mine bought a land through tax foreclosure auction...he bought it without doing any due diligence ahead of time, anyways he found out its a very small lot and worth nothing if he is trying to sell.
The appraisal value is $12k and he paid a bit less but no body would buy such lot on the market...somebody told him to donate the land to the city or the county or some sort of organization that helps people and file it on his tax return as deduction.
my questions are:
1- Any suggestions who to target to donate the land
2- If he donated the land can he file it as a loss or deduct it from his tax refund at the end of the year...he is entitled to pay some capital gain taxes on other properties he sold so this deduction will definitely help.
3- If point 2 is doable will he be able to file based on the appraisal value $12k?
Any suggestion is highly appreciated.
1 - Any qualified charitable organization that aligns with his values, and accepts donations of real estate.
2 - If he donates the land to a qualified organization he wouldn't realize gain or loss on disposal, instead he'd get a charitable contribution deduction for the fair market value of the land. There are AGI limitations for contributions, but at $12k I wouldn't be too concerned about that.
It may be worth reading IRS Pub 561. He'll need to get an independent third party appraisal for the land to establish FMV and amount of deduction.
Thank you for the valuable information...I really appreciate your help.