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Donating Land in Alabama deeded to my deceased parents

Micki Ray Harper
Posted Apr 3 2024, 09:12

Can my sister and I donate land my deceased parents received deeds through in tax sales?  We did not go through probate as remaining properties were taken care of prior to them passing away.  We do not want to spend more money in attorney fees than what each property is valued at in getting the deeds as well as quiet title actions.  Any suggestions?

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Denise Evans
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Denise Evans
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Replied Apr 3 2024, 15:41

You can donate them. If you donate them to a 501(c)(3) charitable organization, you can get a tax deduction equal to the current fair market value of property, no matter what your parents paid and no matter whether title has been quieted or not.  

The tax deduction is limited to 30% of your adjusted gross income. For example, if you wanted to take a charitable deduction for $100,000, but your adjusted gross income was only $90,000, then the maximum deduction for that year would be $30,000.  The remaining $70,000 would be  carried over to the next year, when you take another look at AGI to see how much deduction you can take. You can continue to roll over for up to 5 years.

If you cannot use the charitable deduction, you can sometimes sell the properties to a high income individual who CAN use them.  If someboy were in the 37% tax bracket, they would owe $37,000 on $100,000 of AGI.  They would gladly pay you $10,000 or $15,000 to save the $37,000. They have to hold the deeds for at least one year, though, before donating. Your holding period is added together with your parents' holding period, so I'm sure you have already met the 1 year requirement.

To take the deduction, it does require an appraisal and a tax form signed by the appraiser.

I'm in Tuscaloosa, also. Contact me and I can walk you through some other details and maybe look at some other options.

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Micki Ray Harper
Replied Apr 4 2024, 03:22

Thank you kindly for your quick response as it is greatly appreciated!  So there will be no problems in donating these properties with the deeds in their names?  They have several properties in different counties.  Thank you again.

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Denise Evans
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Denise Evans
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Replied Apr 4 2024, 04:35

No problems.  If your parents already quieted title or obtained quitclaim deeds from former owners, you can donate and the donee can get title insurance.  If not, you can still donate but the donee will not get title insurance. Generally a church in the neighborhood is a willing donee because they can use sweat equity and donated materials to make the property habitable again and either sell it or rent at below-market rents to someone in the church who needs that assistance.

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Micki Ray Harper
Replied Apr 4 2024, 05:19

Thank you again! Thankful for your very helpful info. Losing both parents in less than 8 months has been difficult and we want to make the right decisions. For some reason we all failed to include the tax sale properties in their estate planning. Word to the wise, in doing life estate planning, include ALL properties. Thanks! 

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Peter Walther
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Peter Walther
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Replied Apr 4 2024, 07:28

Without knowing some additional facts, I think it's difficult to give you an informed opinion.  For example, what state is the property in; did your parents hold title jointly or as tenants in common; did your mother or father die last or did they die in a common disaster; did they leave a will or did they die intestate; if there are wills who are the beneficiaries, if not, are you and your sister the heirs and are there any other heirs; was the property their or the last to die's homestead and are there any creditors of your parents estates.  The answer to any of these questions may lead to additional questions.  If you don't want to retain an attorney for actionable advice, you could just walk away from the property.  Depending on the value of the property it may eventually be sold on a tax deed but in the meantime, I believe title would simply remain in their estates or in the last to die's estate.

I doubt you'd be able to find a legitimate charitable org to accept a deed from you and your sister without being able to get a title policy otherwise they'll have to job of clearing the title and will still need your assistance.  if the property is valuable enough you might be able to get one to front the cost before accepting a deed.

You might also find an investor willing to take the property for free if they can figure out a way to make some risk-free money.

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Peter Walther
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Peter Walther
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Replied Apr 4 2024, 07:30

If you do find someone to accept a deed, if it were me, I'd only provide a quit claim deed.

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Micki Ray Harper
Replied Apr 7 2024, 09:20

Thank you for your response.  We live in Alabama.  These properties are tax deeded properties in Alabama.  I have spoken with my attorney who is in the process of doing a quiet title action on a home my father obtained in a tax deed sale nearly 5 years ago.  He granted me the home through a quiet claim deed.  He has given me insight as to what I can do.  I had initially asked this question as my parents did not owe anyone for anything.  There was a will and yes everything but these tax deed properties were in a life estate.  All monetary accounts had POD or beneficiaries listed (my sister and myself)  We did not want our parents'names to be tarnished by not paying the yearly taxes and their names published in the local paper as not having done so.  We aren't really interested in these tax sale properties, hence the thought of possibly donating them.  I always like to do my research if I am unsure of anything.  I again, appreciate your responses as I received additional information as to what we may can do in regards to this matter.

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Micki Ray Harper
Replied Apr 7 2024, 09:22

Sorry, I obtained the home through a quit claim deed, not quiet claim deed.

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Peter Walther
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Peter Walther
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Replied Apr 8 2024, 06:33

You're very welcome and I'm glad you're getting some legal advice.  I hope it all works out for you.