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Donating a Building to the Local Fire Department – A Few Things You need to know

Suppose you have an old house on your property, but you would really like to tear it down and build a new one. The demolition will cost $10,000 and you just really do not want to spend the money. A good friend offers you advice, or maybe the idea just pops into your head.

I will allow the local fire department to burn it down – a training exercise. I will receive a tax deduction, help the local fire department, and have that old house removed from the property! You are thinking, What a great idea!

STOP! You are about to step on a land-mine. Like so many others, you just might suffer a hard lesson.  The IRS has prevailed in denying the deduction to many others who have come before you. Here is a list (not all-inclusive) of what you need to know.

  • There can be no requirement for the Fire Department to demolish the building(s). In other words, it is to be an actual transfer to the Fire department of an entire interest to use and enjoy as they so determine.
  • Be certain the Local Fire Department is in fact a 501(c)(3) organization.
  • You will need a Written Appraisal from a Qualified Appraiser
  • The IRS will take a close look at the value of what you are giving away Vs. the benefit received for the free demolition.

Typically this strategy creates a substantial deduction and the stakes are high. Obviously you will want to involve an attorney and tax professional. With good advice and with a legitimate donation of value, transferring a building to your local fire department can net a healthy tax deduction.

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