We are often faced with opportunities where we want to help and give our resources. But, current cash flow may not be sufficient to make the gift you desire. When you wish to make a gift that exceeds your current cash abilities, consider giving a non-cash asset to meet your generosity goals.
When you sell property that has appreciated in value, you may have to pay a tax on the appreciation—called a capital gains tax. If you gift the proceeds of the sale to charity you receive an income tax charitable deduction for your gift. Yet you will still be liable for tax on the appreciation.
However, if you transfer appreciated property directly to charity prior to the sale, tax on the appreciated value is avoided.
When property has not appreciated in value, it is deductible up to 60% of adjusted gross income, just as gifts of cash. When property has appreciated in value, the charitable deduction is limited to 30% of adjusted gross income, with up to five additional years to use the full deduction amount. A gift of long-term appreciated property to a qualified charity can totally avoid capital gains taxes.
Appreciated Property + Taxes
There are specific rules regarding gifts of appreciated property and the impact on taxes. To help you navigate through the regulations, we have prepared a special Guide to Gifts of Appreciated Property.