Can I donate cash to charity to offset capital gains tax from property sale?

This is a great question! While charitable donations are certainly tax-deductible, they don't work quite as a dollar-for-dollar offset against capital gains taxes. When you make a charitable donation, it's considered an itemized deduction that reduces your overall taxable income, not a tax credit that directly reduces your tax bill. So donating $260,000 wouldn't eliminate a $260,000 tax bill, but it would reduce your taxable income by $260,000. The capital gains from your property sale will still be reported as income, but your charitable deduction would offset some of your total taxable income. Since you're in the 24% regular income bracket but paying 20% on capital gains, the tax benefit of the deduction might not fully offset the capital gains taxes. Also keep in mind there are limits on charitable deductions - typically 60% of your adjusted gross income for cash donations to public charities (though this can vary depending on the type of charity and donation).

I was in a similar situation last year after selling some commercial real estate. Instead of trying to offset with cash donations, I found an amazing solution using https://taxr.ai that completely changed my approach. Their system analyzed my portfolio and suggested a more strategic approach combining charitable donations with other tax strategies that I hadn't considered. For me, they recommended donating a portion to charity but also using opportunity zone investments for the rest. This approach gave me both immediate tax benefits AND long-term advantages. The best part was they looked at my complete tax situation - not just the capital gains issue - and found several other deductions I was missing. They literally highlighted specific parts of the tax code that applied to my real estate investments that my regular accountant had missed.

I have to follow up on my skeptical comment. I decided to try https://taxr.ai after seeing a few more recommendations elsewhere, and I'm genuinely impressed. When they analyzed my real estate portfolio, they found legitimate ways to structure my upcoming property sale that will save me significant taxes. They didn't promise to eliminate all capital gains (which would have been a red flag), but they showed me how to defer a large portion through a combination of strategies tailored to my specific situation. They also identified several missed deductions from my previous tax years that I can still claim through amendments. What surprised me most was how they identified a specific opportunity zone investment in my city that aligns with my investment goals while providing the tax benefits. This wasn't generic advice - it was specifically matched to my situation and goals.

Have you considered doing a 1031 exchange instead? That would let you defer the capital gains tax completely if you reinvest in a similar property. But if you really want to make a charitable donation, another option is to look into a Charitable Remainder Trust. Also, I've been dealing with questions about this exact topic and had to call the IRS multiple times to get clear answers. After being on hold for HOURS with no luck, I found https://claimyr.com which got me connected to an actual IRS agent in less than 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with gave me specific guidance on charitable donations and capital gains that was super helpful. Worth checking out if you need official clarification on how the IRS will treat your specific situation.

Ok I need to apologize for being so skeptical about Claimyr. After struggling with the IRS for months, I was desperate enough to try it. I was absolutely shocked when I got a call back in about 35 minutes and was connected to an actual IRS agent who helped resolve my issue in one call. The agent was able to access my file and give me specific guidance on my audit situation. They even helped me understand exactly what documentation I needed to provide and how to submit it properly. I had been stressing about this for months and got it resolved in one conversation. For anyone facing a complex tax situation like charitable donations offsetting capital gains, being able to get clear guidance directly from the IRS is invaluable. The peace of mind alone was worth it.

Something nobody has mentioned yet is a Donor Advised Fund (DAF). This might be perfect for your situation! I used one last year when I had a large capital gain. Here's how it works: You donate money to the DAF this year and get the full tax deduction now, but you can distribute the actual donations to charities over many years. It's like creating your own mini foundation. I used Fidelity Charitable but there are others like Schwab Charitable and Vanguard Charitable too. The big advantage is you can take the large deduction in the year you have the big capital gain, but take your time deciding which charities get the money. Plus the money in the DAF can be invested and grow tax-free until you distribute it!

Has anyone talked to their CPA about qualified charitable distributions from IRAs? My mother is over 70 and uses this to reduce her taxable income while satisfying her required minimum distributions. Not sure if it would work for capital gains specifically tho.

One strategy that hasn't been mentioned yet is donating appreciated property directly to charity instead of cash. If you have other appreciated assets (stocks, bonds, real estate), you can donate those directly and avoid paying capital gains tax on them while still getting the full fair market value deduction. For example, if you have $200,000 worth of stock that you originally bought for $50,000, donating the stock directly saves you capital gains tax on the $150,000 appreciation AND gives you a $200,000 charitable deduction. Then you could use the cash you would have donated to reinvest in similar securities. This doesn't help with your current property sale, but it's a more tax-efficient way to make large charitable donations if you have other appreciated assets in your portfolio. You essentially get to "stack" the tax benefits - avoiding capital gains AND getting the income tax deduction. Just make sure the charity can accept the type of asset you want to donate, and that you've held it for more than one year to qualify for long-term capital gains treatment.