Did you know donating valuables to a nonprofit has the same impact as mailing a check or cash? In fact, doing so has some additional benefits for both the organization and donor!
When a donor makes a gift of real property to a qualifying charitable organization, generally, the fair market value of the asset at the time of the gift is eligible for a charitable income tax deduction.
By real property, we mean non-financial gifts. This is tangible personal property – things such as equipment, jewelry, vehicles, boats, real estate, etc.
The type of deduction depends on the type of property gifted (ordinary income property, capital gain property, or Section 1231 property), and the deductibility is subject to adjusted gross income limitations.
The above sounds complicated, and there are many different nuances and things to keep in mind (that the donor should consult a CPA and financial planner on), but here’s the point:
Gifts made to qualifying charitable organizations do not always have to be in cash or financial instruments such as stocks and bonds. Additionally, when these types of gifts are made, they can benefit the donor by lowering his or her income tax liability.
Farmers and loggers can donate equipment that is no longer in use. Personal property such as artwork, equipment, jewelry, antiques, and more can be donated. When the charitable organization sells the property, it can use the sale proceeds for much needed resources. What’s more – the sale proceeds are not taxable to the qualifying organization.
Next time you think of selling something online, consider gifting the item to a charity. The tax deduction will help you, and your gift will be put to work by the charity to help others.
Jack Furlong, CFP®, APMA, BFA, is a Certified Financial Planner at Ameriprise Financial Services in Hibbing and Virginia and has served on UWNEMN's Board of Directors for four years.