Giving With a Return Address: CRTs and Fee Simple Donations, Explained

Charitable planning occupies a unique corner of the tax code: the one place where the government genuinely subsidizes generosity. Two strategies come up constantly with owners of appreciated real estate — the charitable remainder trust and the fee simple donation — and both share a defining trait that the enthusiasm around them tends to underweight: they are irrevocable. This is planning you do with your eyes open, before the transaction, with counsel in the room.

The charitable remainder trust

A CRT is an irrevocable trust into which you contribute appreciated assets — real estate, concentrated stock, a business interest. The trust sells the asset without recognizing immediate gain at the trust level, reinvests the full proceeds, and pays you (or your chosen beneficiaries) an income stream for a term of years or for life. You receive a current charitable deduction for the present value of what will eventually pass to charity, and when the term ends, the remainder goes to the charitable organizations you named.

The honest accounting: the income you receive carries out taxable character over time, so the gain is spread and deferred rather than erased; the deduction is a fraction of the contribution, not the whole; and the remainder genuinely leaves your family — a feature, not a bug, but one that estate planning (sometimes paired with life insurance) should address deliberately. Timing is everything: contribute the asset before a sale is effectively arranged, or the IRS may treat the gain as yours anyway.

The fee simple donation

A fee simple donation is more direct: acquire or hold real property and donate the deeded interest — in whole or in part — to a qualified charity, generating a charitable deduction generally tied to the property’s appraised fair market value. Unlike most strategies we discuss, the primary objective here is the deduction and the charitable purpose; any investment return is secondary, and the structure should be evaluated on exactly those terms.

The scrutiny is the point: valuation is the entire ballgame, and aggressive appraisals in donation strategies have drawn sustained IRS attention across many charitable-deduction structures. A defensible strategy features a qualified independent appraisal, a legitimate charitable recipient, complete substantiation, and a deduction your CPA is comfortable signing — not merely one the promoter is comfortable projecting.

Where these fit in an exchange conversation

For a property owner weighing a sale, these strategies belong on the same table as a 1031 exchange — not because they replace it, but because they answer a different question. An exchange preserves and compounds; charitable structures convert appreciation into income, deduction, and legacy. Owners with charitable intent, highly appreciated assets, and no need to keep every dollar compounding often blend the approaches across different properties. That design conversation — with your CPA and estate attorney engaged — is the one to have before anything is listed.

Considering either path? We work alongside your tax and legal advisors to model the outcomes honestly — the deduction, the income, the irrevocability — so the generosity is as well-engineered as the rest of your plan.