Can You Put Your House in a Charitable Remainder Trust? Rules, Benefits, and Real-World Tips

Putting your home in a charitable remainder trust (CRT) sounds like the kind of thing you'd only hear in board rooms filled with high-powered estate planners or among folks who already have a ballet named after them. Turns out, it’s not just for the ultra-rich. If you own a house you’ve thought about eventually giving to charity, or you’re just looking for a smarter way to manage your estate, understanding how CRTs work with real estate could change your retirement, your taxes, and your legacy. Most folks are surprised at how practical and powerful this option can be—and how it can steer clear of tax pitfalls, too. But, like every big money move, there’s a lot beneath the surface.

How Charitable Remainder Trusts Handle Real Estate

Let’s talk facts: the IRS does allow you to donate a house to a charitable remainder trust. But before you start packing up for the charity of your choice, you’ve got to know the details. A CRT is basically a split-interest trust. You transfer your property into the trust, and the trust either pays you (or someone you pick) an income stream for a set period or for life. When that time is up, the charity gets what’s left—usually by selling the property and collecting the proceeds. This approach isn’t just generous; it's smart estate planning. It lets you do something charitable while still benefiting from your real estate in the meantime.

The two main flavors of CRTs are annuity trusts and unitrusts. A charitable remainder annuity trust (CRAT) pays you a fixed dollar amount each year, like getting a steady paycheck regardless of the market. Unlike CRATs, charitable remainder unitrusts (CRUTs) pay you a percentage of the trust’s value each year, which can change based on investment performance. Most people like CRUTs for houses because real estate values can swing. For example, you put your lake cabin—maybe it’s your mom’s old place—into a unitrust. The trust sells it, and for life, you get cash deposits, while your favorite conservation group waits for the eventual payout.

Okay, but what actually happens when you put a house in a CRT? First, you donate the deed to the trust. You’ll need an appraisal—no guessing on value allowed. Then, the trust can choose to keep the house as a rental or sell it, depending on your plans and the charity's preference. Most CRTs sell right away so they can diversify the investment, but some hang onto the property for a while. The trust itself isn’t taxed on capital gains when it sells, allowing more dollars to work in your income stream.

You might wonder about your rights after the transfer. Once your house is in the CRT, you don’t own it anymore. If you want to keep living there, this isn’t the strategy for you (unless you set it up creatively, but that starts to get complex). Also, the property must not have a mortgage—most trusts cannot accept mortgaged property due to IRS ‘self-dealing’ rules, and the risk to the charity. If you still owe the bank, you’ll need to pay that off first or find a workaround with your estate planner.

Folks sometimes ask about what types of real estate qualify. You can put in a primary home, vacation property, land, or even commercial space. The big catch is that the property must be marketable—no major environmental hazards, no tricky title issues. Charities are not looking to inherit a headache.

Here’s a twist that catches many by surprise: Unlike a basic gift of real estate, a CRT lets you avoid capital gains taxes at the time of the sale. So if you’re sitting on a duplex you bought in 1992 for a song, and it’s ballooned in value, moving it to a CRT before selling means no taxes drain the proceeds.

There’s even an IRS table for the latest stats on CRTs and donated property. To underscore how real this strategy is, last year nearly 6,500 new CRTs were formed in the U.S., with real estate representing about 22% of total assets transferred into CRTs. Check out this table:

Now, for some people, the process can be slow. Appraising unique or remote property, getting clear title, or finding a trustee willing to handle real estate can take months. Plus, charities can be picky about the types of real estate they’ll accept, since they shoulder the hassle and expense of selling. It’s usually easier with residences or investment properties in good locations. I once spoke to an executive at a land trust who turned down a 12-acre swamp; it was pretty, but nobody wanted to buy it, and zoning issues scared away their risk teams.

So yes, putting a house in a CRT is absolutely possible, but there’s no one-size-fits-all template. Read the fine print, talk to pros, and always appraise first. If you like the idea of using your property as a tool for both income and legacy, you’ll want to keep reading.

Tax Perks and Pitfalls When Donating Real Estate to a CRT

Here’s where things get spicy for financial planners and DIY philanthropists alike: the tax benefits might surprise you. Donating a house to a CRT can pack a triple punch—income tax deductions, capital gains tax avoidance, and shrinking your estate for estate tax calculations. If you know the numbers, it makes CRTs a serious option for folks selling property in hot markets or nearing retirement.

First up, when you donate the property into the trust, the IRS lets you take a charitable income tax deduction. The amount isn’t the market value of the home, but rather the “present value” of the actual amount the charity will get in the future, after the income stream pays out. You’ll need a specialized attorney or accountant to figure out the deduction, since it involves government discount rates, IRS actuarial tables, and the payout terms. Still, in most cases, this is thousands—sometimes tens of thousands—of dollars in deductions you can use over up to five years.

The second big win? Skipping capital gains tax. That’s the real magic for folks holding low-basis, high-value homes. Imagine Fiona (my spouse) inherits a beach cottage she’s not using. We let a CRT take the title, and the trust immediately sells it for $800,000—way more than her parents’ original cost decades ago. If we sold it, Uncle Sam would gobble up a hefty chunk in taxes. With the CRT, all $800,000 goes into the trust, spinning off income for us and much more for the charity at the end.

On top of that, the property’s value drops out of your taxable estate, meaning your heirs might owe less in estate tax. That’s handy if you’re thinking about generational wealth or you have kids who don’t really want a bunch of rental properties anyway.

But, and this is important, there’s a fair bit of complexity. If the trust sells the home, say, a year after transfer, it can still trigger “unrelated business income tax” (UBIT) if the property was debt-financed or used in a business. That’s why most savvy donors clear off all debts before gifting, and the trust sells as soon as possible.

You’ll want to avoid any impression that you or your relatives are still running the show. The IRS keeps a sharp eye on “self-dealing.” If you try to keep living in the home after it’s gifted to the CRT, or you set up a sweetheart deal to lease it, the IRS could hit you with penalties, throw out the deduction, or even yank the trust’s charitable status. There’s a reason estate planners are always saying, "Don’t get cute with the IRS."

Another issue to watch: the deduction for donating "tangible personal property" (like a house full of antique furniture, or a cottage plus a bunch of collectibles) can be limited if the property won’t be used directly for the charity’s exempt purpose. For example, if you donate a ski cabin, and the charity just plans to sell it (rather than use it as, say, a recovery retreat), your deduction is based on cost basis, not fair market value. Houses generally escape this trap, but if your property comes with a weird attachment—like a fleet of jet skis—your deduction may shrink.

You’d think most charities jump for joy at these arrangements, but the truth is, some shy away from CRTs with real property. Why? Real estate can come with legal, environmental, or market risks. Before getting too far, always talk to the charity in question—and even get a letter of intent from them, confirming they’ll accept the asset through a CRT structure.

Here’s a tip: If your property is in a hot market, you might get top dollar by selling through a CRT, because the charity can often sell without haggling over capital gains and use a professional broker. On the flip side, if your house takes a year to sell, you could see your income stream stall.

This isn’t a step for the casual giver. You absolutely need a pro to draw up the trust, get the appraisal, and make sure all the documents line up with IRS requirements. Skimping here can mean losing out on the deduction, or—worse—seeing your charitable intent unravel in post-mortem audits. In 2022, the average legal and administration bill for transferring real estate into CRTs was around $7,500. Don’t get sticker shock; that’s still peanuts compared to the tax savings on a seven-figure property.

Here’s an easy way to visualize the tax differences:

Essentially, the more gain you’re facing, the bigger the advantage of using a CRT to manage the sale. The deduction rules are rigid, so if you’re stuck on the numbers, chase down a CPA, not a guess from your neighbor who "knows a guy."

There’s another move called the "flip" CRT, handy for vacation homes or land that might be tough to sell. In this structure, the CRT starts as a net income trust, paying you only what the property actually generates for rent. Once the property is sold, the trust flips and begins to pay the standard unitrust percentage. If your house isn’t flying off the market, this can be a decent strategy for getting comfortable with the risks while still shooting for a long-term win.

If you don’t need the income yourself, you can always set up the CRT to pay a parent or a friend—just make sure to stick to the IRS magic number: they have to be alive, and you can’t fudge the math to inflate the deduction. Everything lives and dies by the actuarial table.

Don’t forget, you’ll need a professional trustee familiar with real estate—the average trust company or charity isn’t always equipped to handle every kind of property. You’re looking for someone who will do due diligence, negotiate sales, and navigate local property quirks. Some big charities (universities and hospitals, for example) have whole departments set up just for this purpose. Others will require you to find your own admin company and just accept the money when it’s all done. Worth asking before you start.

Real-Life Examples and Pro Tips for Donating a House to a CRT

If you want to see how this works in practice, you’ll find plenty of real-life donors (not just obscure billionaires) putting CRTs to work for cool and practical reasons. Sometimes, it’s a retiring landlord with no kids interested in a portfolio of suburban duplexes, or a couple with a vacation condo they visit twice a year. Others are people like my friend Sam, who saw his empty inherited family home eat up cash and wanted to transform that anchor into an income stream—and a bigger footprint for his favorite wildlife charity.

Take this true scenario. Sam inherited a second home outside Austin, worth about $550,000. It wasn’t getting much use—his kids live out of state, and renters trashed it last time. If he sold, he'd owe capital gains taxes on the appreciation since the last step-up in basis. Instead, he worked with an estate lawyer to form a charitable remainder unitrust, transferred the house to the CRT, and handed the admin to a national nonprofit with a proven real estate team. The trust sold the property cleanly, reinvested the proceeds, and Sam now gets a predictable income every year—more than he’d net from renting, and he gets a fat tax deduction spread over five years. The charity gets the remainder down the line and has already promised him tickets to their annual gala.

A couple more tested tips:

• Start early. CRTs with real estate take longer than cash or stocks—especially if you need appraisals or clear up old title defects. Plan for at least six months total.
• Pay off all mortgages. Most CRTs cannot take property with outstanding loans, or if they do, you get hammered with unrelated business income tax.
• Don’t try to stay living in the property after the donation. This causes headaches with IRS rules. If you want to keep living there while giving it away, check out a "retained life estate" gift, which is a different animal.
• Find out if the charity or trust company has experience with CRTs and real estate—ask for examples of past deals.
• If you’re hoping for income, work with a financial pro to make sure the trust’s investments will actually generate enough; otherwise, you might be disappointed with the cash flow.
• Involve your heirs early, so they’re not surprised down the road. Sometimes CRTs can be combined with “wealth replacement” techniques like life insurance to keep everyone happy.
• Always get a written letter from the chosen charity confirming they’ll accept the type of property you want to donate.
• If your property is in another state, check with a local attorney; state laws can add complexity.

Nobody wants their charitable giving to turn into drama or regret. Getting the paperwork right from the start and being upfront about your motives with all parties (and your tax guy) is the fast track to zero stress. Donating a house to a CRT isn’t just about the numbers—it’s about legacy. When you get it right, you make a killer impact for causes you care about and often improve your own finances for good measure.

If this move sounds appealing, talk to a team: a lawyer who knows trusts, a CPA with CRT experience, and—ideally—someone at the charity who’s steered these gifts before. No reason your old family home should become another "forgotten property" story when it can secure your own financial future and lift up an entire cause. Odds are, you'll find it a lot more satisfying than holding out for one more hot real estate market.