Maximize Your Impact: Tax-Smart Charitable Giving for REIs

"When you are kind to others, it not only changes you, it changes the world." -Harold Kushner

Disclaimer: This article will ignite your entrepreneurial creativity, but it does not constitute tax or legal advice. It's always best to consult your tax and legal professionals for personalized guidance.

3-minute read

• Higher Standard Deduction
• Stacking deductions
• Donating Art and Real Estate
• Charitable Remainder Trust (CRT)
• Cash
• What isn't a charitable gift?

Here is a way to keep your mind clear (and not so focused inward) that I want to raise this time of year: giving.

But there are traps ahead, sitting alongside opportunities.

Read on.

It's crucial to note that most tax planning opportunities cease after 12/31. Therefore, taking action now is strongly advised.

Amid this cultural and economic insanity, one of the hardest-hit groups has been those who rely upon charitable donations. And right now, if you're paying any attention (though I remind you to see above and don't pay TOO closely), you know that the number of people needing help is ongoing and increasing.

Charitable giving is not just a kind act; it's a financially wise decision. By cultivating a habit of giving to charity, you not only perceive the world as brimming with possibilities but also realize your power to effect significant change.

Plus:

By giving, you create for yourself a network of people and organizations who are not just grateful, but also part of a larger community. This sense of connection and gratitude is a powerful motivator for continued giving.

And:

When you consider the beneficiaries of many of these organizations, you realize that your circumstances are more manageable. This realization fosters a sense of gratitude for the resources you have to spare, making your giving more mindful and impactful. That said, here's how to maximize the TAX benefits of giving in 2024.

The Standard Deduction

TCJA (Tax Cuts and Jobs Act of 2017) raised the standard deduction. Therefore, more people use the higher standard deduction ($14,600 for single, $29,200 for married filing jointly, and for head of household, $21,900 (over 65? Your standard deduction is $31,150). To solve this, "stack" your donations to have them all count during one taxable year.

Stacking Deductions

Because a typical year may require more deductions to exceed the Standard Deduction, doubling your giving in one year and skipping the next may push you past the Standard Deduction into extra tax savings. This strategy is known as 'stacking deductions '.

You might benefit in 2024, but I would notify your beneficiaries that you will be giving them a double contribution in 2024 and no donation in 2025.

Tell them to expect the double donation and pay before December 31, 2024. Notifying them will help your charity, church, or any other 501(c)(3) organization with its budgeting.

Donate appreciated Art, Collectibles, and Stocks/Real Estate

If you've held an investment for over a year that has appreciated, get that appraisal and take the donation for the current market value. For instance, if you have stock, you might donate it at the current fair market value. You won't pay as much tax, you can get a better deduction, and the charity gets more.

I have a friend in Evanston, Wyoming, who owned a vacant church and donated it at total appraised value.

Art and collectibles also need an appraisal to document the value at the time of your generous donation.

Stocks and real estate need the basis (how much you paid for the asset).

Establish a Charitable Remainder Trust (CRT)

It is beyond the scope of this not-so-short blog post, but recognize this way of giving.

There are many powerful new ways of doing a CRT that will blow your mind if appropriate for your situation. Talk to your wealth advisor or insurance guru.

Cash donations in 2023-24

Who uses cash anymore? It might apply to you. A 60% AGI (Adjusted Gross Income) cap on cash donations exists.

Remember what is (and isn't) a deductible gift.

Whatever organization you're giving has to be an IRS-recognized section 501(c)(3) charitable organization. To ensure they are tax-exempt and can receive tax-deductible contributions, check out the IRS's online "Tax Exempt Organization Search" tool. Gifts through Venmo or GoFundMe intended for an individual or non-501(c)(3) group are not deductible.

I firmly believe in the power of charitable giving, both for your tax return and (even more importantly) for your state-of-mind.

Stay focused out there, wear your seatbelt, and have a beautiful holiday season!

BE THE ROAR not the echo®

Warmly, Janet, the Tax Wizard