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Appreciated Assets

Appreciated assets are investments or personal property that have a current value that is higher than the price you paid for it. Assets such as stocks, mutual funds, land, and collectables can gain value over time. The owner of appreciated assets could face tax consequences when selling those assets for a profit.

Using appreciated assets as charitable contributions is a great option for those who wish to support ministry and receive some great tax benefits. The donor of appreciated assets avoids capital gains taxes and also could be eligible for a tax deduction for the charitable gift.

Here are some examples:

Example 1: Billy inherited some undeveloped land from his uncle, and would like to donate it to KML. Since the land has appreciated in value, he is concerned about the taxes he will have to pay if he sells it. To avoid the tax consequences, he donated it to KML and asked that the money be used for capital improvements. By making this decision, Billy avoids some significant taxes and gives a sizable gift to KML for ministry.

Example 2: Jay and Laura own some rental property, but they are ready to sell it before they die. Their children don't want to continue operating it, and Jay doesn't want the property to be part of the estate settlement. They are also concerned that the property has increased in value over the years and might cause a major tax burden for the family. They decide to donate the property to their church and let the church leaders handle the sale. This approach gives Jay and Laura an opportunity to make a donation to their church for the full value of the property and also remove the asset from their estate without the concerns of capital gains and the related taxes.

Donating appreciated assets can be a great opportunity for both the donor and the charity, but there are issues to address before the final decision should be made. Contact your financial or estate-planning professional before making a final decision regarding the donation of appreciated assets.

 

To discuss a planned gift to KML, contact your KML Estate Plan and Deferred Gift Counselor, 
Paul Snamiska, at 262-677-4051 x1116 or paul.snamiska@kmlhs.org.

The information that is provided on this site is for educational purposes only. Consult your personal tax consultant, attorney, or financial planner for specifics that apply to your personal situation.