I have property I bought at a tax foreclosure auction in
Michigan. I
want to donate the property to charity and take the tax benefit.
I
have owned the property for over 1 year and the "redemption
period" has
come and gone for the previous owner to reclaim this property.
When I
purchased this I received a quit claim deed from the State. I
have
recorded the deed on file at the county office. Because the
State
foreclosed on the property due to the previous owner not paying
taxes,
I do not have a quit claim deed from the previous owner to
myself.
Because of the foreclosure, title companies will not insure the
property. Under state law, I legally own the property and I'm
the sole
owner on file with the county. However, Title companies
complain that
the title is not clearly in my name because the previous owner
was
foreclosed on and did not deed the property to me. Can I donate
this
to a charitable organization and take the tax credit? I don't
want to
do anything wrong. I want to be sure that down the road the
charitable
organization can not come back to me and say "you donated
property that
isn't 100% yours." Opinions? Thank you in advance.
No problem. You can donate the property, take the fair market
value deduction. Tell the charity about the title insurance
problem. They will never complain. Or you could do a quiet title
action to clear all defects. If you don't, the charity will.
McGyver
