Donating Appreciated Assets
Stock, Mutual Funds, Crypto, and Real Estate
Donating long-term appreciated assets—such as stocks, mutual funds, crypto, or real estate—offers a "double tax benefit" that can significantly increase the impact of your generosity. This strategy allows you to give up to 20% more at no additional cost.
The "Double Tax Benefit"
Donating appreciated assets provides two distinct financial advantages.
- Eliminate Capital Gains Tax: When you sell an appreciated asset, you owe tax on the profit (up to 23.8% federally, plus state taxes). By donating the asset directly, you likely pay $0 in capital gains tax, and the charity receives the full value.
- Full Fair Market Value Deduction: If you itemize, you can likely deduct the current market value (up to 30% of your AGI) of the asset on the date of the gift, regardless of what you originally paid for it.
Comparison: Stock vs. Cash
Scenario: You want to make a $10,000 gift. You own stock bought for $2,000 that is now worth $10,000. You are in the 37% tax bracket with a 20% long-term capital gains rate.
| ACTION | SELL STOCK & DONATE CASH | DONATE STOCK |
|---|---|---|
| Value of Gift | $8,400 (after $1,600 tax) | $10,000 |
| Income Tax Deduction | $3,108 | $3,700 |
| Capital Gains Tax Paid | $1,600 | $0 |
| Total Tax Savings | $1,508 | $5,300 |
Summary Checklist for Asset Donations
- Holding Period: Must be held for 1 year or more to qualify for the fair-market value deduction.
- Limit: You can deduct up to 30% of your Adjusted Gross Income (AGI) annually (vs. 60% for cash).
- Carryforward: If you exceed the 30% limit, you can carry the excess deduction forward for up to 5 years.
- Portfolio Health: This is a good way to rebalance your portfolio by trimming "winners" without triggering a tax bill.
