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Donate Appreciated Property to Turbocharge Your Giving

Charitable gifts of appreciated property eligible for long tern capital gain treatment can generate some great tax benefits. Gifts of such property provide a double benefit - a charitable deduction, in most cases, for the full fair-market value of the property plus avoidance of any potential capital gain tax.

Charitable deduction. A donor who contributes long-term capital gain securities or real estate (i.e., property held for more than one year) gets a charitable deduction equal to the property’s full fair market value (FMV), not just what he paid for it. Gifts of short-term capital gain property provide a deduction for only the donor’s cost basis in the property.

A donor can deduct, in the year of the gift, the full fair market value of the long term appreciated property, subject to a limit of 30% of his adjusted gross income (AGI). Any excess can be carried forward for up to five years.

Special election. A donor can choose to deduct gifts of long term appreciated property under a 50% AGI limit, rather than the 30% limit previously mentioned. However, as a trade off, the donor’s deduction for the long term capital gain property will be limited to the property’s cost basis.

Avoid capital gain. A donor who makes an outright gift of long term securities or real estate avoids paying capital-gain tax on the property’s appreciation. A donor can realize substantial savings by contributing the property rather than selling it and contributing the after-tax proceeds.

Remember, the rules are different for different types of assets and different types of charities. You should consult your tax advisor before making any decisions.

Please contact me for more infomation.

Jeff Dangeau

Dangeau Law Firm, PLLC

(479) 409-7265

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