I love hand-me-downs. I shop at consignment stores, and when I’m done with my found treasures, I donate them to local charities. But it would never occur to me to do this with my home.
Yet, for some homeowners, especially ones in foreclosure, donating a house to charity may be the only way out of an awful situation -- and it seems like it could even be a path back to financial well-being. It's becoming quite popular, in fact, because it not only allows the homeowner who can't sell her/his house a way out, but also the donated homes -- many of which are renovated and resold -- add new value to the neighborhood. Here’s how it works:
According to an industry website, as long as you’ve owned your home for more than a year, you can deduct the full market value of the home from your taxes. And if that full market value is more than your income (which it sure as heck is around these parts, I can tell you), you can spread that tax break over five years.
That could make a huge difference to a family looking to get out from under an upside-down mortgage without defaulting.
On the other hand, if you’re just looking to ditch your meth house, you might have less luck. In areas with really bad foreclosure problems, charities have been able to get super-picky about what kind of properties they’ll take. Given the current state of my abode, they’d walk in and run out screaming. Especially if they’re allergic to playground sand in the carpet.
Giving up your home is never easy, I’m sure. But if this is on the up-and-up, it could be a real boon for people who would otherwise just have to walk away from an investment and eat the down payment.
And it’d be really cool if I could walk into my local "Out of the Closet" and find a dream house for $14.50! (But darn it, that’s not how it works. Charities sell the homes themselves -- with Habitat for Humanity being the obvious fixer-upper recipient -- and pocket the profit, however small.)
Would you donate your house if you couldn’t sell it?
Image via taxbrackets.org