Overview

Donating non-cash assets—real estate, art, private-equity or partnership interests—lets donors support causes while often reducing taxes on appreciated property. These gifts can avoid capital gains tax that would arise on a sale, transfer wealth efficiently, and help charities obtain valuable assets. But non-cash gifts are more complex than writing a check: valuation, charity capacity, IRS rules, and timing matter.

This article explains the tax basics, practical steps, asset-specific considerations, common pitfalls, and documentation you’ll need. For actionable templates on documenting gifts, see our guide on How to Document Charitable Donations for Maximum Deduction and for step-by-step instructions on gifting real estate, see Gifting Appreciated Assets: Step-by-Step Donating Stocks and Real Estate. If you’re an entrepreneur considering gifts of startup equity or partnership interests, Charitable Giving for Entrepreneurs: Donating Equity and Startup Shares is also useful.

Sources used in this article include IRS guidance on charitable contributions and valuation (see IRS Publication 526 and Publication 561) and instructions for Form 8283. This is educational content and not personalized tax advice—consult your CPA and estate attorney before acting.

Key tax rules you must know

  • Long‑term holding period: To generally deduct the fair market value (FMV) of an appreciated asset, you must have held the asset for more than one year. If held one year or less, the deduction is usually limited to your basis (what you paid).

  • Source: IRS Publication 526 and Publication 561 (see https://www.irs.gov/charities-non-profits/charitable-contributions and https://www.irs.gov/publications/p561).

  • AGI limits: Deductions for gifts of appreciated capital‑gain property to public charities are subject to percentage‑of‑AGI limits (historically 30% for long‑term appreciated property to public charities; higher limits apply to cash). Excesses may be carried forward up to five years. Refer to IRS Pub. 526 for current percentages and specifics for private foundations.

  • Source: IRS Publication 526.

  • Appraisal and Form 8283: Non‑cash gifts greater than $5,000 generally require a qualified appraisal and must be reported on Form 8283. For many gifts over $5,000, you’ll complete Section B and attach an appraisal summary; for securities and some exceptions, the rules differ. Consult the Form 8283 instructions for thresholds and signature requirements.

  • Source: Form 8283 and instructions (https://www.irs.gov/forms-pubs/about-form-8283).

  • Other limits and special rules: Tangible personal property (like art) may have different valuation rules depending on whether the charity’s use of the property is related to its exempt purpose. Gifts of closely held business interests or fractional interests can trigger special restrictions and may be valued differently.

  • Source: IRS Publication 561.

How the mechanics work (high level)

  1. Confirm the charity can accept the asset. Many small nonprofits cannot manage real estate, art, or illiquid private equity. If a charity cannot accept the asset, alternatives include donating the proceeds after a sale, contributing to a donor‑advised fund (DAF) that accepts complex assets, or establishing a private foundation.

  2. Get a qualified appraisal if required. For non‑cash gifts above IRS thresholds (generally $5,000), obtain a qualified appraisal from a credentialed, independent appraiser before or at the time of gift.

  3. Transfer title and paperwork. Proper legal transfer is essential—for real estate, that means deeds; for equity, assignment documents governed by partnership/LLC agreements; for art, bills of sale and provenance records.

  4. Report the gift on Form 8283 if required. Attach the appraisal summary and any required charity acknowledgments when filing your tax return.

  5. Track AGI limits and carryforwards. If your deduction exceeds the applicable percentage limit, you can carry forward the excess for up to five years (subject to the same limits in subsequent years).

Asset-specific considerations

Real estate

  • Types: rental property, vacant land, personal residences (partial rules), commercial buildings.
  • Typical benefit: donating appreciated real estate generally lets you claim FMV if held more than one year and the property is given outright to a public charity; you avoid capital gains tax on the appreciation you would have realized if you sold.
  • Considerations: charities may sell property, incur carrying costs (insurance, taxes, maintenance), or be unable to accept property with environmental liabilities or mortgages. Conduct a clean title search and environmental review. Some donors use a DAF or private foundation to manage the sale.

Art and collectibles

  • Valuation is often subjective. A qualified appraisal by an art appraiser (American Society of Appraisers, Appraisers Association of America, etc.) is usually required for high‑value gifts.
  • Tax rule nuance: If the charity’s use of the art is related to its mission (e.g., a museum accessioning a painting), a full FMV deduction is typically available. If the charity will merely sell the art, the deduction may be limited to your cost basis.

Private equity, partnership and closely held business interests

  • These gifts pose the most complexity: partnership agreements may restrict transfers; the charity may be unable to hold an illiquid interest; valuation needs are complex and often controversial.
  • Often a better path is to sell the interest (if allowed) and donate proceeds, or use a DAF/private foundation that can accept complex gifts and manage disposition. If giving an entire business interest to a charity, expect intensive due diligence and negotiation.

Practical checklist for donors

  • Talk to the charity first: Confirm acceptance policy and disposition plan for the asset.
  • Consult your tax advisor and estate attorney before starting transfer paperwork.
  • Arrange a qualified appraisal (if value > $5,000) and get it done by a credentialed appraiser experienced in that asset class.
  • Clean title and resolve liens, mortgages or environmental issues before donation.
  • Complete and keep copies of Form 8283 and any appraisal summaries, correspondence, and the charity’s written acknowledgment.
  • Consider timing: donate in a tax year where you can use the deduction; review AGI limits and carryforward rules with your CPA.
  • Explore intermediaries: DAFs, private foundations, or charity broker programs can accept and liquidate complex assets when the recipient charity cannot.

Common mistakes and red flags

  • No appraisal or inadequate appraisal: Without a qualified appraisal and supporting documentation, the IRS may disallow the claimed FMV.
  • Donating restricted or encumbered property: Property with liens, unresolved title issues, or environmental liabilities can be rejected or impose liability on the charity.
  • Assuming FMV deduction when charity will immediately sell the item: For certain tangible personal property, the deduction equals basis unless the charity’s use is related to its mission.
  • Ignoring transfer restrictions: Many partnership/LLC agreements prohibit transfers or require consent; failing to follow these rules can void the gift.

Alternatives and planning tools

  • Donor‑Advised Funds (DAFs): Some national DAF sponsors accept non‑publicly traded assets and handle liquidation for the donor. This can simplify administration and allow immediate tax benefit while the DAF recommends grants over time.
  • Charitable remainder trusts (CRTs) and charitable lead trusts (CLTs): Useful when you want income, a deferred charitable benefit, or to manage capital gains while supporting charity.
  • Private foundation: Accepts complex gifts but brings administrative burdens and excise taxes; suitable for donors who want control over timing and use.

Real‑world illustrations (anonymized)

  • Real estate: A donor transferred a long‑held rental property to a public charity. Because the property had been owned more than a year and the charity used the proceeds to fund programs after a tax‑free sale, the donor avoided capital gains tax and claimed a FMV deduction subject to AGI limits (after review by their CPA and an environmental assessment).
  • Art: An art collector donated a museum‑quality painting directly to a museum that accessioned it. The museum’s documented use of the painting supported a full FMV deduction; the donor obtained a specialized appraisal and completed Form 8283.
  • Private equity: A donor owning a limited partnership interest in a private fund explored a gift to a small nonprofit. The fund agreement restricted transfers; after legal review, the donor transferred the interest to a DAF that accepted it, and the DAF managed liquidation according to fund terms.

Documentation and IRS forms (practical notes)

  • Use Form 8283 to report noncash gifts; Section B is used when the claimed value of property exceeds $5,000 and requires additional signatures and appraisal information.
  • Keep the charity’s contemporaneous written acknowledgement for any single donation of $250 or more.
  • Retain appraisals, title documents, assignment instruments, and correspondence for at least as long as the statute of limitations for the relevant tax year.
  • Sources: IRS Publication 526; Publication 561; Form 8283 instructions.

Final takeaways

Non‑cash giving can be a powerful philanthropic and tax‑planning tool when executed carefully. The principal risks are valuation disputes, transfer complexity, and donating assets a charity cannot use. Work with the receiving charity, a tax advisor, an attorney, and qualified appraisers. When in doubt, consider intermediaries (DAFs, CRTs, private foundations) that can accept and manage illiquid gifts.

This article is educational and not individualized tax or legal advice. For application to your situation, consult your CPA, estate planning attorney, and the receiving charity.

Further reading and internal resources

Authoritative sources

Professional disclaimer

This content is for educational purposes and does not constitute tax, legal, or financial advice. Consult a qualified tax advisor and attorney before making or reporting non‑cash charitable contributions.