Charitable Giving-Gifting appreciated property Part 2

Gifting appreciated property (continues...)

Comparison of gifting appreciated property and selling appreciated property and donating cash proceeds

1) Selling property and donating proceeds of sales

If you own art worth $2,000 which you bought 5 years ago for $500. If you sell the art instead of just gifting it to charity and donate the proceeds from the sale, you will get the following results. This example assumes that your tax bracket is 28%.

Charitable contribution of cash after the sale of property	$2,000
Tax rate (your tax bracket)	28%
Tax savings	$560
Taxable gain ($2,000 - $500)	$1,500
Tax rate	28%
Tax cost	($420)
Net tax savings	$140

By selling the property and contributing proceeds of sales to charity, you receive a $2,000 tax deduction for the cash contribution. However, you incur taxes on the $1,500 capital gains (capital gains tax) from the sale. You net tax savings is only $140.

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