Contributions – Art Appreciation
Appreciate Your Art Appreciation
If you donate art purchased years ago that has appreciated significantly, get the highest deduction available.
Here’s what we mean:
There are a number of requirements to write off the full market value of the art you contribute to charity. Let’s say you bought a painting for $4,000 a few years ago, but now it’s valued at $10,000.
Donating the painting can generate a $10,000 deduction, which saves you up to $3,960 in federal income tax, depending on your bracket. State and local tax deductions may increase your savings.
However, to get the full deductions you must meet these tests:
- The donated art must have been yours for more than a year.
- The art must be donated to a public charity or nonprofit group, not to a private foundation.
- The art must be appraised by a qualified, unrelated party.
- The “related use” rules must be satisfied. These rules prevent you from getting a full deduction if you donate art to a charity and the organization turns around and sells it.
Strategy: To pass the “related use” test and get the $10,000 write-off, donate the painting to an art museum that displays that type of work or to a university that’s uses such paintings in art history courses.
