If you\u2019re charitably inclined and you collect art, appreciated artwork can make one of the best charitable gifts from a tax perspective. In general, donating appreciated property is doubly beneficial because you can both enjoy a valuable tax deduction and avoid the capital gains taxes you\u2019d owe if you sold the property. The extra benefit from donating artwork comes from the fact that the top long-term capital gains rate for art and other \u201ccollectibles\u201d is 28%, as opposed to 20% for most other appreciated property.<\/p>\n
Requirements<\/strong><\/p>\n The first thing to keep in mind if you\u2019re considering a donation of artwork is that you must itemize deductions to deduct charitable contributions. Now that the Tax Cuts and Jobs Act has nearly doubled the standard deduction and put tighter limits on many itemized deductions (but not the charitable deduction), many taxpayers who have itemized in the past will no longer benefit from itemizing.<\/p>\n For 2018, the standard deduction is $12,000 for singles, $18,000 for heads of households and $24,000 for married couples filing jointly. Your total itemized deductions must exceed the applicable standard deduction for you to enjoy a tax benefit from donating artwork.<\/p>\n Something else to be aware of is that most artwork donations require a \u201cqualified appraisal\u201d by a \u201cqualified appraiser.\u201d IRS rules contain detailed requirements about the qualifications an appraiser must possess and the contents of an appraisal.<\/p>\n IRS auditors are required to refer all gifts of art valued at $20,000 or more to the IRS Art Advisory Panel. The panel\u2019s findings are the IRS\u2019s official position on the art\u2019s value, so it\u2019s critical to provide a solid appraisal to support your valuation.<\/p>\n Finally, note that, if you own both the work of art and the copyright to the work, you must assign the copyright to the charity to qualify for a charitable deduction.<\/p>\n Maximizing your deduction<\/strong><\/p>\n The charity you choose and how the charity will use the artwork can have a significant impact on your tax deduction. Donations of artwork to a public charity, such as a museum or university with public charity status, can entitle you to deduct the artwork\u2019s full fair market value. If you donate art to a private foundation, however, your deduction will be limited to your cost.<\/p>\n For your donation to a public charity to qualify for a full fair-market-value deduction, the charity\u2019s use of the donated artwork must be related to its tax-exempt purpose. If, for example, you donate a painting to a museum for display or to a university\u2019s art history department for use in its research, you\u2019ll satisfy the related-use rule. But if you donate it to, say, a children\u2019s hospital to auction off at its annual fundraising gala, you won\u2019t satisfy the rule.<\/p>\n