Gifting appreciated property

Gifting appreciated property to a charitable organization can produce substantial tax savings. Gifting appreciated property might include gifting art, gifting antiques, gifting real estate, and gifting stocks. Gifting appreciated property does not include gifting ordinary income property such as inventory or a work of art your created.

One year ownership rule

In order to take advantage of tax savings from gifting appreciated property, you must have owned the property more than one year before gifting the appreciated property away.

Gifting appreciated property is better than selling

Gifting appreciated property to a charitable organization is better than selling the property and donating sales proceeds of sales of the property. Your tax savings will be much less since you will incur capital gains tax from the capital gains you receive from selling property at a higher value than you originally bought it.

Capital gains tax can be hefty so if you plan to donate your property to a charitable organization and the property is an appreciated property, just donate the property directly to the charitable organization. This is not the same case when the property is a depreciating property, as we will discuss later.

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