5 Tips for Donating Appreciated Assets

Time Donations for Maximum Tax Advantage

As a 40-year veteran in estate planning with CPA credentials, I’ve seen how donating appreciated assets can transform tax outcomes while supporting meaningful causes.

For maximum tax benefits, consider the timing of your donations relative to potential tax law changes. The Biden 2025 budget proposal threatens to trigger gain recognition on gifts, which would dramatically increase the tax cost of charitable transfers. Making significant gifts before any law changes take effect could preserve the current favorable treatment.

One overlooked strategy is using hard-to-value assets strategically. While marketable securities are straightforward to donate, family business interests or real estate often provide greater tax leverage. A recent client saved substantially by gifting a portion of their closely-held business rather than selling it and donating cash—avoiding capital gains entirely while securing a significant deduction.

My tip: integrate your charitable giving with your broader estate plan rather than treating it as separate. For a family concerned about both tax efficiency and legacy, we established a Donor Advised Fund that provided an immediate deduction while creating a multi-generational philanthropic vehicle their children now help manage. This approach satisfied their charitable objectives while addressing their family financial planning needs simultaneously.

Avoid Capital Gains with Direct Asset Donations

When I donate appreciated assets—like stocks or real estate—I do it directly to the charity before selling, so I avoid paying capital gains tax on the appreciation. The full market value becomes a tax-deductible donation, and the charity receives more because it doesn’t owe taxes either.

One tip: make sure the charity is equipped to accept non-cash assets. Some nonprofits need a little lead time or use a donor-advised fund to simplify the process. I’ve used a donor-advised fund myself to bundle donations in a high-income year and then grant them out over time.

It’s a smart way to align generosity with smart tax planning—more impact, less tax.

Consult Charities on Property Acceptance Policies

In my 18 years of real estate experience, I’ve helped several clients donate properties to charitable organizations, particularly when they inherit homes they don’t want to manage. Just last month, I guided a client through donating a rental property to a local housing nonprofit, helping them avoid capital gains taxes while supporting affordable housing initiatives. I always suggest talking with the charity first about their property acceptance policies – some have specific requirements or may even help with the appraisal process, which saved one of my clients considerable time and money.

Plan Early for Smooth Stock Donation Process

I’ve found that donating stocks or mutual funds that have appreciated significantly in value can save considerably more in taxes than simply giving cash. Last year, I assisted a client in donating some technology stocks they had purchased for $10,000 that had grown to $50,000, enabling them to avoid capital gains tax while receiving a full deduction for the current value. My advice is to begin planning these donations early in the year and collaborate with both your financial advisor and the charity to ensure all the paperwork aligns smoothly.

Use Donor-Advised Funds for Strategic Giving

Donating appreciated assets—like stocks, real estate, or private equity—is one of the most effective tax strategies for high-net-worth individuals. Instead of selling the asset and donating cash (triggering capital gains tax), donate the asset directly to a 501(c)(3) or donor-advised fund (DAF). This allows you to avoid capital gains and still receive a fair-market value deduction (up to 30% of AGI for long-term assets).

A DAF gives you the deduction now, lets your heirs manage future giving, and offers privacy. If you’re about to sell a business or asset, donate a portion before the sale. If done after, the IRS sees it as a cash donation—and you’ll pay the tax.

One critical step: the appraisal. Just as with older strategies such as land conservation easements (which are no longer viable due to IRS scrutiny), your deduction hinges on a solid, defensible valuation. A weak or non-compliant appraisal can negate your entire tax benefit. Work with professionals who know how to document and support the donation.

Lane Kawaoka shares a story of a client who donated syndication shares into a DAF pre-liquidity. She saved over $300,000 in taxes, built a family giving fund, and preserved her privacy. This is Penthouse-level wealth strategy—controlling where your money goes and keeping it out of the IRS’s hands.