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Capital Gain Property: Charitable Deductions (2025 IRS Guide)

This guide covers “Capital Gain Property” within charitable deductions. The following material presents the IRS treatment of this topic, including the qualifications, exceptions, and examples in the source section. Read the rules alongside the facts of your own situation before deciding what to report, deduct, or document.

Adapted from Publication 526 (2025), Charitable Contributions, published by the Internal Revenue Service. This guide retains the source edition’s years, amounts, deadlines, and examples. It is guidance for that edition, not a statement that the same figures apply to every tax year.

Context for these rules

If you contribute property with an FMV that is more than your basis in it, you may have to reduce the FMV by the amount of appreciation (increase in value) when you figure your deduction.

Your basis in property is generally what you paid for it. If you need more information about basis, see Pub. 551.

Different rules apply to figuring your deduction, depending on whether the property is:

  • Ordinary income property, or

  • Capital gain property.

Capital Gain Property

Property is capital gain property if you would have recognized long-term capital gain had you sold it at FMV on the date of the contribution. Capital gain property includes capital assets held more than 1 year.

Capital assets.

Capital assets include most items of property you own and use for personal purposes or investment. Examples of capital assets are stocks, bonds, jewelry, coin or stamp collections, and cars or furniture used for personal purposes.

For purposes of figuring your charitable contribution, capital assets also include certain real property and depreciable property used in your trade or business and, generally, held more than 1 year. You may, however, have to treat this property as partly ordinary income property and partly capital gain property. See Property used in a trade or business under Ordinary Income Property, earlier.

Real property.

Real property is land and generally anything built on, growing on, or attached to land.

Depreciable property.

Depreciable property is property used in business or held for the production of income and for which a depreciation deduction is allowed.

For more information about what is a capital asset, see chapter 2 of Pub. 544.

Amount of deduction—general rule.

When figuring your deduction for a contribution of capital gain property, you can generally use the FMV of the property.

Exceptions.

However, in certain situations, you must reduce the FMV by any amount that would have been long-term capital gain if you had sold the property for its FMV. Generally, this means reducing the FMV to the property’s cost or other basis. You must do this if:

  1. The property (other than qualified appreciated stock) is contributed to certain private nonoperating foundations;

  2. You choose the 50%-limit instead of the 30% limit for capital gain property given to 50% limit organizations, discussed later;

  3. The contributed property is intellectual property (as defined earlier under Patents and Other Intellectual Property);

  4. The contributed property is certain taxidermy property, as explained earlier; or

  5. The contributed property is tangible personal property (defined earlier) that:

    1. Is put to an unrelated use (defined later) by the charity; or

    2. Has a claimed value of more than $5,000 and is sold, traded, or otherwise disposed of by the qualified organization during the year in which you made the contribution, and the qualified organization hasn’t made the required certification of exempt use (such as on Form 8282, Donee Information Return, Part IV). See also Recapture if no exempt use, later.

Contributions to private nonoperating foundations.

The reduced deduction applies to contributions to all private nonoperating foundations other than those qualifying for the 50% limit, discussed later.

However, the reduced deduction doesn’t apply to contributions of qualified appreciated stock. Qualified appreciated stock is any stock in a corporation that is capital gain property and for which market quotations are readily available on an established securities market on the day of the contribution. But stock in a corporation doesn’t count as qualified appreciated stock to the extent you and your family contributed more than 10% of the value of all the outstanding stock in the corporation.

Tangible personal property put to unrelated use.

Tangible personal property is defined earlier under Future Interest in Tangible Personal Property.

Unrelated use.

The term “unrelated use” means a use unrelated to the exempt purpose or function of the qualified organization. For a governmental unit, it means the use of the contributed property for other than exclusively public purposes.

Example.

If a painting contributed to an educational institution is used by that organization for educational purposes by being placed in its library for display and study by art students, the use isn’t an unrelated use. But if the painting is sold and the proceeds are used by the organization for educational purposes, the use is an unrelated use.

Deduction limited.

Your deduction for a contribution of tangible personal property may be limited. See (5) under Exceptions, earlier.

Recapture if no exempt use.

You must recapture part of your charitable contribution deduction by including it in your income if all the following statements are true.

  1. You donate tangible personal property with a claimed value of more than $5,000, and your deduction is more than your basis in the property.

  2. The organization sells, trades, or otherwise disposes of the property after the year it was contributed but within 3 years of the contribution.

  3. The organization doesn’t provide a written statement (such as on Form 8282, Part IV), signed by an officer of the organization under penalty of perjury, that either:

    1. Certifies its use of the property was substantial and related to the organization’s purpose, or

    2. Certifies its intended use of the property became impossible.

If all the preceding statements are true, include in your income:

  1. The deduction you claimed for the property, minus

  2. Your basis in the property when you made the contribution.

Include this amount in your income for the year the qualified organization disposes of the property. Report the recaptured amount on Schedule 1 (Form 1040), line 8z.

Ordinary or capital gain income included in gross income.

You don’t reduce your charitable contribution if you include the ordinary or capital gain income in your gross income in the same year as the contribution. This may happen when you transfer installment or discount obligations or when you assign income to a qualified organization. If you contribute an obligation received in a sale of property that is reported under the installment method, see Pub. 537, Installment Sales.

Example.

You donate an installment note to a qualified organization. The note has an FMV of $10,000 and a basis to you of $7,000. As a result of the donation, you have a short-term capital gain of $3,000 ($10,000 − $7,000), which you include in your income for the year. Your charitable contribution is $10,000.

Using the guidance

Keep the documents that establish the dates, amounts, and circumstances described above. References to other chapters, forms, worksheets, or earlier and later sections refer to the linked IRS publication. Check the full publication and its updates before relying on a rule for a different tax year or a situation not addressed here.

Sources and further reading

The cited U.S. government text is in the public domain. Source accessed October 28, 2026. Fynoptic has organized this material for educational use and is independent of, and not endorsed by, the IRS.

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