The Tax Rules for Donating Artwork to Charity

If you’re an art collector, you may wonder about the tax breaks available for donating a work of art to charity. Several different tax rules may come into play in connection with such contributions. Basic rules Your deduction for a charitable contribution of art is subject to be reduced if the charity’s use of it is unrelated to the purpose or function that’s the basis for its qualification as a tax-exempt organization. The reduction equals the amount of capital gain you would have realized had you sold the property instead of giving it to charity. Example: You bought a painting five years ago for $10,000 and now it’s worth $20,000. You contribute it to a hospital. Your deduction is limited to $10,000 because the hospital’s use of the...

Tax Implications of Donating Artwork to Charity

If you own a valuable piece of art, or other property, you may wonder how much of a tax deduction you could get by donating it to charity. The answer to that question can be complex because several different tax rules may come into play with such contributions. A charitable contribution of a work of art is subject to reduction if the charity’s use of the work of art is unrelated to the purpose or function that’s the basis for its qualification as a tax-exempt organization. The reduction equals the amount of capital gain you’d have realized had you sold the property instead of giving it to charity. For example, let’s say you bought a painting years ago for $10,000 that’s now worth $20,000. You contribute it...