A gift of an appreciated asset, often common stock or mutual fund shares, is a valuable way to contribute to a charitable organization and receive tax benefits based on the value of the asset(s).
Because of the appreciation factor, gifts of securities “cost” donors less than equivalent gifts made in cash. By donating the stock, the charity receives a larger gift than it would receive if the investor first sold the stock and then donated the proceeds after deducting the capital gain taxes. The investor receives a greater tax deduction by giving the stock directly to the charity and avoiding the capital gain tax.
Make a gift while transferring the responsibility and expense of managing the property. Each piece of property and its unique circumstances are reviewed to determine the suitability of the property as a gift. Generally, an acceptable piece of property is one that can be readily sold.
There are many ways to donate property. It can be an outright gift, a retained life estate, or placed in a trust. If you are considering such a gift to Seton Hall, please contact us to discuss its suitability.
Benefits of Donating Real Estate
- There may be a charitable income tax deduction that would lower your income tax.
- By donating a property, you may be able to avoid realizing capital gains.
- Depending on your state regulations, you may be able to turn the property into a gift that is structured to provide income for you and a beneficiary.
- If the property is your home or farm, you may be able to make a gift of it now and continue to live in it for the rest of your life and receive tax benefits the year of the gift.
- If the contribution from your property exceeds the allowable charitable deduction limits, the deduction may be carried forward for five years.
Tangible Personal Property
Tangible personal property, such as art, jewelry, coin collections and household furnishings can be gifted under specific guidelines from the IRS as to the tax deductibility of the gift. Two key issues to be considered before contributing a gift of this type is whether or not the item(s) can be put to related use or whether its use or function is related to the tax-exempt purpose of the charity to which it is donated.
The IRS has very specific guidelines for appraising and reporting gifts of tangible personal property, which must be followed to support a charitable income tax deduction. Gifts such as these are reviewed on a case-by-case basis.
For more information about gifts of any appreciated assets, please contact us.