IRS Views Real Estate Donations
The IRS has expressed concern over gifts of real property it considers to be suspicious in nature. It has announced that it will be examining real estate investors and organizations engaged in such transactions.
The problem: An investor acquires property subject to a long-term lease. Then he or she donates it and makes an overly aggressive valuation. This results in a sizeable tax deduction on the investor’s return.
To compound the abuse, some investors have arranged to buy back properties at reduced prices. So the donor winds up with both a huge tax deduction and the original property.
The IRS will be watching property donations carefully, so make sure that you are in full compliance with the tax rules.
To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or tax related matter.