Can You Put a House in a Charitable Remainder Trust? Here's How It Works

Putting your house in a charitable remainder trust isn’t just a tax trick-it’s a powerful way to support causes you care about while keeping income for yourself or your family. Many people assume charitable giving means giving up everything, but a charitable remainder trust lets you keep living in your home, get regular payments, and still leave the property to charity after your lifetime. It’s not for everyone, but if you own real estate and want to make a lasting impact, this option deserves a closer look.

What Is a Charitable Remainder Trust?

A charitable remainder trust (CRT) is a legal arrangement where you transfer assets-like cash, stocks, or real estate-into a trust. The trust pays you (or someone you name) an income for life or a set number of years. After that, whatever’s left goes to one or more charities you choose. The key part? You get an immediate tax deduction when you put the asset in, and you avoid capital gains tax when the trust sells the asset later.

This works because the IRS treats the trust as a separate tax-exempt entity. So if you put a house worth $800,000 into a CRT, the trust can sell it without paying capital gains tax. The proceeds are reinvested, and you get paid a percentage of the trust’s value each year-usually between 5% and 10%. After you pass away, the remaining balance goes to your chosen charity.

Why Put a House in a Charitable Remainder Trust?

Most people don’t think about donating their home because they want to keep living in it. But a CRT lets you do both. Here’s why it makes sense:

• You avoid paying capital gains tax if you’ve owned the house for years and its value has gone up significantly.
• You get a tax deduction in the year you fund the trust-often worth 25% to 40% of the home’s appraised value.
• You receive steady income for life, which can help with retirement planning.
• You remove the property from your taxable estate, which can reduce estate taxes for your heirs.
• You support a cause you care about without giving up your home right away.

For example, a retired couple in Brisbane owned a waterfront home they bought for $350,000 in 1995. By 2025, it was worth $1.4 million. Selling it outright would’ve meant paying over $300,000 in capital gains tax. Instead, they put it into a CRT. They got a $420,000 tax deduction, avoided the capital gains tax, and now receive $65,000 a year in income. When they pass away, the home’s remaining value-estimated at $1.1 million-goes to their local food bank.

How Does It Work Step by Step?

Putting your house into a CRT isn’t something you do with a form online. It requires legal and financial planning. Here’s how it works:

1. Choose a charity. Pick one or more qualified 501(c)(3) organizations in the U.S. or equivalent registered charities in Australia. Make sure they’re willing to accept real estate donations.
2. Hire a professional. Work with an estate planning attorney and a financial advisor who understand CRTs. This isn’t DIY territory.
3. Appraise the house. The IRS and Australian Taxation Office require a professional appraisal to determine the fair market value for your tax deduction.
4. Set up the trust. Your attorney drafts the trust document, naming you as the income beneficiary and the charity as the remainder beneficiary. You also choose whether you want a fixed payment (charitable remainder annuity trust) or a percentage of the trust’s value each year (charitable remainder unitrust).
5. Transfer the deed. Once the trust is active, you sign over the title to the trust. The trust now owns the house.
6. Trust sells the house. The trustee sells the property, reinvests the proceeds, and starts making payments to you.
7. You get paid. Payments begin-usually monthly or quarterly-and continue for your lifetime or up to 20 years.
8. Charity gets the rest. After your death (or the end of the term), the remaining assets go to your chosen charity.

Types of Charitable Remainder Trusts for Real Estate

Not all CRTs are the same. Two main types handle real estate differently:

• Charitable Remainder Annuity Trust (CRAT): Pays a fixed dollar amount each year, no matter how the trust’s investments perform. Good if you want predictable income, but risky if inflation rises.
• Charitable Remainder Unitrust (CRUT): Pays a fixed percentage of the trust’s value, recalculated each year. If the trust grows, your payments go up. If it loses value, your payments go down. Most people choose this one for real estate because it adjusts with market changes.

For a house, a CRUT is almost always better. Real estate values can fluctuate, and the trust’s investments may grow over time. A CRUT lets you benefit from that growth.

Who Shouldn’t Do This?

It’s not a one-size-fits-all solution. Some people should avoid putting their house in a CRT:

• If you need to sell your house soon to pay medical bills or move into aged care-you won’t have access to the full sale proceeds right away.
• If your home is still heavily mortgaged. Most CRTs can’t take on new debt, and lenders usually won’t allow a mortgage to transfer into the trust.
• If you’re under 60 and expect to live 30+ more years. The income payments are based on life expectancy. The longer you live, the smaller your annual payout becomes.
• If you have children who need the house. Once the house is in the trust, it’s gone from your estate. You can’t leave it to them later.

Also, if your home is worth less than $500,000, the cost of setting up the trust (often $5,000-$15,000) might not be worth it. The tax savings need to outweigh the fees.

What Happens If the House Doesn’t Sell?

One common worry: What if the trust can’t sell the house quickly? The answer? It doesn’t matter. The trust doesn’t need to sell right away. It can hold the property, rent it out, and use the rental income to make payments to you. Many CRTs do exactly this-especially with homes in high-demand areas.

For example, a widow in Melbourne put her three-bedroom home into a CRT. The trust rented it out for $3,800 a month while it waited for the right buyer. After 18 months, it sold for 12% above the appraisal value. The rental income kept her payments steady during the wait.

Tax Benefits You Can’t Ignore

The tax savings are real-and substantial. When you donate a house to a CRT, you get:

• A federal income tax deduction for the present value of the future gift to charity. In Australia, you get a similar deduction under the Income Tax Assessment Act 1997.
• No capital gains tax on the sale of the house by the trust.
• Reduced estate taxes because the house is no longer part of your estate.

Let’s say you’re in the top tax bracket (45% in Australia) and donate a house worth $1 million. Your deduction could be worth $350,000-$400,000. That means you could save $157,500-$180,000 in income tax over a few years. Add in avoiding $200,000+ in capital gains tax, and you’re looking at nearly $400,000 in combined savings.

What Charities Accept Real Estate?

Not every charity can handle real estate. Smaller organizations often don’t have the resources to manage, insure, or sell property. Look for:

• Large national charities with dedicated real estate departments (e.g., Red Cross, Cancer Council, RSPCA).
• Community foundations that have partnerships with real estate professionals.
• Religious organizations with property management experience.

Ask the charity directly: “Do you accept real estate donations through a charitable remainder trust?” Some will say no. Others will have a process ready. Don’t assume-ask.

Alternatives to a Charitable Remainder Trust

If a CRT feels too complex or expensive, here are simpler options:

• Donating the house outright: You get a tax deduction based on fair market value, but you lose all income and control. Best if you don’t need the money.
• Sell the house and donate the proceeds: Pay capital gains tax, then donate the after-tax amount. Simpler, but you lose the tax savings.
• Donor-advised fund: Donate cash or appreciated assets to a fund, get an immediate deduction, and recommend grants to charities over time. Doesn’t work for real estate unless you sell first.

None of these offer the combination of income, tax savings, and charitable legacy that a CRT does.

Final Thoughts

Putting your house in a charitable remainder trust is a smart move if you own valuable real estate, want to reduce taxes, need income in retirement, and care about leaving a legacy. It’s not a quick fix. It takes planning, professional help, and patience. But for the right person, it’s one of the most effective tools in estate planning.

If you’re sitting on a home that’s worth far more than you paid for it-and you’ve already provided for your family-this could be the quiet, powerful way to give back without giving up everything.