Lose a tax deduction for donated property?

[Stephen R.]

I'm looking to pick up a property that was donated to a charity. (Actually to be more specific it seems it was quitclaimed for $10) I'm being told that the charity will not agree to my offer price because they are concerned that the donor will lose their tax deduction if they do. I've been searching the IRS publications but can't seem to find an answer as to when and how that would happen. 

[Linda Weygant]

The donor does not lose the tax deduction, but you (and the charity) could run afoul of the donor restrictions.

A donor can donate property to a charity with no restrictions.  The donor gets the fair market value of the property as a tax deduction with no capital gain (if applicable).

The donor can also donate property to a charity with any kind of restriction they choose.  So if the donor said "This property can only be used as an orphanage" or "this property must be used to house disabled vets" or whatever, then the charity must either utilize the property as restricted or contract with a third party to set it up for that specific use.  It would be up to the donor (or their estate/heirs) to enforce the restriction.

If, however, the donor did not restrict the use of the property, then the charity can utilize the property however they see fit, including selling the property and utilizing the proceeds in whatever manner is consistent with their mission.  

Find out if this was a restricted gift.  If so, make sure you are abiding by the restrictions.  If there was no restriction, then carry on!