Gifts of Appreciated Securities or Real Estate
I.R.C. § 170(c)
What Are Gifts of Appreciated Securities or Real Estate?
Gifts of appreciated securities or real estate can be a tax-efficient way to support charitable causes while improving your overall tax planning.
When you sell appreciated assets (such as stocks, bonds, mutual funds, or real estate), you generally owe capital gains tax on the increase in value. If instead you donate the appreciated asset directly to a qualified charitable organization, you can generally:
-
Avoid capital gains tax on the built-in appreciation, because the charity (as a tax-exempt entity) typically can sell the asset without paying capital gains tax.
-
Claim a charitable contribution deduction that is often based on the asset’s fair market value at the time of the gift, if the asset is “capital gain property” held more than one year and you donate to a qualifying public charity (subject to AGI limits and other rules).
Important nuance: the fair market value deduction and the applicable AGI limit depend on the type of asset, the holding period, and whether the recipient is a public charity or a private foundation.
A Simple Way to Understand
Gifts of Appreciated Securities or Real Estate
- This strategy lets you donate stocks, mutual funds, or property that have grown in value, instead of giving cash
- Think of it like giving away a rare baseball card that is now worth way more than you paid for it, the charity gets the full value, and you skip the taxes on the jump in price
- When you give the asset directly, you usually avoid paying capital gains tax on the growth
- You can also claim a tax deduction for the full market value of what you donated, not just what you paid for it
- It is one of the most tax-smart ways to give, helping a cause you care about while keeping more of your money working for you
Who Should Consider Gifts of Appreciated Securities or Real Estate?
- High-net-worth individuals who itemize and want to support charity while managing taxes.
- Investors with appreciated portfolios who prefer not to trigger capital gains by selling.
- Estate planners who want to reduce the size of a taxable estate through charitable giving (charitable gifts can also be part of broader estate and legacy strategies).
What Are the Gifts of Appreciated Securities/Real Estate Specifics for 2026?
Federal Estate and Gift Tax Exemption (2026)
- For 2026, the federal lifetime estate and gift tax exemption is $15,000,000 per individual (and $30,000,000 for a married couple, with portability, if properly elected).
- Charitable gifts can remove assets from your estate, but the exemption itself is a separate concept from the income-tax charitable deduction. (Both can matter in the same plan.)
Charitable Deduction AGI Limits (2026)
- Cash gifts to public charities are generally deductible up to 60% of AGI (subject to ordering rules and other limits).
- Appreciated capital gain property to public charities is generally deductible up to 30% of AGI when the deduction is based on fair market value (again, subject to ordering rules and other limits).
- Gifts to certain private foundations can face lower AGI limits, and in many cases the deduction for appreciated property can be limited (commonly to cost basis rather than fair market value, with exceptions such as publicly traded stock).
Beginning in Tax Year 2026
- Non-itemizers may deduct up to $1,000 ($2,000 if filing jointly) of cash charitable contributions to certain qualified organizations (subject to the rule’s specifics).
- Several sources report additional new limits for itemizers, including a new floor and a cap on the tax benefit for top-bracket taxpayers. If you include these in public-facing copy, phrase them carefully and keep them clearly tied to “tax year 2026 rules.”
Qualified Appraisals and Substantiation (2026)
For noncash gifts:
-
If your deduction for an item (or group of similar items) is more than $5,000, you generally must attach Form 8283, and you generally need a qualified appraisal (with exceptions, including publicly traded securities).
What Are the Advantages of Gifting Appreciated Securities or Real Estate?
Tax Deductions
You may be able to claim a charitable deduction, often based on the fair market value of the donated asset, depending on the asset type, holding period, and the type of charity.
Avoidance of Capital Gains
Donating appreciated assets directly can avoid triggering capital gains tax that would typically apply on a sale.
Estate Planning Benefits
Removing assets from your estate through charitable giving can reduce the taxable estate and simplify legacy planning, depending on your overall estate size and goals.
Support for Charitable Causes
Giving appreciated property can allow you to contribute more to causes you care about, potentially increasing the impact relative to donating cash after paying capital gains tax.
What Are Some Considerations for Gifts of Appreciated Securities or Real Estate?
Administrative complexity and costs: A private foundation can involve meaningful ongoing costs and administrative work, including legal setup, governance, compliance, and annual filings. Private foundations generally must meet an annual payout requirement (commonly described as roughly 5% under the standard private foundation rules). (This is a planning consideration, not a tax “benefit.”)
Regulatory compliance: Private foundations are subject to strict rules (for example, self-dealing restrictions, limits on certain holdings/activities, and detailed operational requirements). Noncompliance can trigger penalty taxes.
Excise tax on net investment income: Private foundations generally owe a federal excise tax on net investment income. For tax years beginning after Dec. 20, 2019, the IRS describes the excise tax rate as 1.39%.
Public disclosure: Private foundations file Form 990-PF, which is publicly accessible, meaning financial and operational details may be available for public review.
Asset Strategy’s Charitable Wealth Planning Services
At Asset Strategy, we understand that effective charitable giving requires careful planning and strategic execution. Our services include:
- Personalized Charitable Planning
- Estate Planning Integration
- Tax Optimization
We invite you to schedule a 15-Minute Call with our team. This conversation will provide insights into how our services can be tailored to your unique needs.
Please note that tax laws and regulations are subject to change. Consult with a financial advisor or tax professional for the most current information and personalized advice.
Charitable Wealth Planning Disclosures:
The information herein has been prepared for educational purposes only and does not constitute an offer to purchase or sell investments.
Because investor situations and objectives vary this information is not intended to indicate suitability or a recommendation for any individual investor.
This material is not to be interpreted as tax or legal advice. Please speak with your own tax and legal advisors for advice/guidance regarding your particular situation.
Charitable Remainder Trusts (CRT) is irrevocable and typically requires a donation of substantial assets. Legally, individuals no longer have control of the assets in the trust. Distributions from the CRT to the income beneficiaries might be taxable as ordinary income. Depending on the amount of assets donated, individuals may not be able to take the full tax deduction in the same year as the donation, however, it can be spread out over a five-year period.
Unlike a charitable remainder trust, a charitable lead trust is not tax-exempt. Trust income is taxed like the income of any other complex or grantor trust. CLT requires legal setup and likely ongoing maintenance costs, requires careful planning to ensure the trust can make its required payments during the trust term, and is irrevocable.
