Gifts of Appreciated Property
Gifts of property can have a powerful impact on the University. They also might be the smartest way for you to maximize your gift while minimizing tax consequences.
- Favorable tax benefits are generated by contributions of long-term appreciated securities and real estate.
- In addition to receiving a charitable deduction for the full fair-market value of such a gift, the donor escapes any potential tax on the capital-gain element of the gifted property.
- The full fair-market value of gifts of long-term, capital-gain securities or real estate is deductible up to 30% of a donor’s adjusted gross income. Any excess deduction can be carried forward for five additional years.
- Gifts of appreciated securities may be used to fund life income plans.
- Property that has declined in value can be sold, realizing a deductible loss, and then the proceeds can be contributed to charity for a charitable deduction. This process ensures recognition and deductibility of the loss.
This is a sale of property to a charity for less than its fair-market value. The bargain sale price may be any amount mutually acceptable to the charity and the donor. Your gift is the difference between the fair market value of the property and the sale price.
TANGIBLE PERSONAL PROPERTY
- A donor is entitled to a charitable deduction for gifts of long-term, capital-gain, tangible personal property (such as works of art, rare books, stamp or coin collections, etc.)
- If the use of the contributed property is related to the exempt purposes of the charity, the donor would be entitled to a charitable deduction for the full fair-market value of the property, subject to the 30% ceiling and carryover.
- If the use of the contributed property is unrelated to the exempt purposes of the charity, the donor would be entitled to a charitable deduction for his or her basis in the property.
- If the donor is the creator of the contributed tangible asset, his or her deduction is limited to the actual cost of producing the asset.