Page 1: Understanding Appreciated Assets and Why Gifting Them Matters
When we talk about gifting appreciated assets: when and how to do it, we are looking at a smart way to help loved ones and reduce taxes at the same time. But first, let’s break it down.
An appreciated asset is something you own that has gone up in value since you bought it. Common examples include stocks, real estate, or valuable collectibles. Let’s say you bought stock for $1,000, and now it’s worth $10,000. That $9,000 difference is called “capital gains.” If you sell that stock, you usually owe taxes on the gains.
But here’s the smart part: when you gift the appreciated asset instead of selling it, you might avoid some or all of those taxes. It’s a move often used by families to share wealth and reduce the tax burden. In 2025, the IRS still allows gifting up to $18,000 per person per year without needing to report it. If you’re married, you and your spouse can each gift $18,000 to the same person—totaling $36,000.
The rules around this topic can seem tricky, but with simple planning, gifting appreciated assets: when and how to do it becomes a powerful tool.
Page 2: When Is the Best Time to Gift Appreciated Assets?
Timing is everything when it comes to gifting appreciated assets. The best time to gift depends on your goals—are you trying to reduce estate taxes, help a loved one financially, or support a cause you care about?
Here are a few situations when gifting makes sense:
- Before selling an asset: If you plan to sell an appreciated asset, gifting it before the sale might help avoid capital gains taxes. The person receiving the gift will take on your original cost basis (what you paid for it), but if they are in a lower tax bracket, they could pay less in taxes than you would.
- During your lifetime rather than at death: Giving assets while you’re alive helps reduce the size of your estate. In 2025, the federal estate tax exemption is high (over $13 million per person), but some states have lower limits. Lifetime gifting helps avoid future estate taxes if laws change.
- Before a child goes to college: Gifting appreciated assets to a student in a low-income bracket may help them sell those assets with little to no capital gains tax. This could be used to pay for tuition or other college expenses.
- To support a charitable cause: Gifting appreciated assets directly to a qualified charity means you can usually deduct the full market value on your taxes and avoid paying capital gains altogether. This is one of the smartest ways to handle gifting appreciated assets: when and how to do it.
Always check with a tax professional before gifting, especially with big amounts or complex assets.
Page 3: How to Gift Appreciated Assets the Right Way in 2025
Now that you understand when to give, let’s talk about how to do it properly.
- Transfer ownership carefully
To gift stock or mutual fund shares, you usually need to transfer them through your brokerage. This means filling out a form and giving the receiver’s account details. Once the transfer is complete, the person you gifted it to becomes the new owner. - Know the tax rules
The receiver of the gift takes your original cost basis. If you bought a stock at $5,000 and it’s now worth $15,000, that $10,000 gain stays with the gift. When the new owner sells it, they’ll pay taxes based on the gain. If they’re in a lower tax bracket, it’s a win for both of you. - Use annual gift exclusions
In 2025, you can give up to $18,000 per person without needing to file a gift tax return. Gifting over that amount isn’t necessarily bad, but you’ll need to file IRS Form 709 to report it. You won’t owe taxes unless your lifetime gifts go over the lifetime limit—more than $13 million in 2025. - Talk to a pro
Because gifting appreciated assets involves tax rules, it’s wise to talk to a CPA or estate planner. They can help you figure out the best way to give, avoid mistakes, and stay within the law.
So, what have we learned about gifting appreciated assets: when and how to do it? It’s a powerful strategy for families, investors, and philanthropists. When done right, it can save money, help loved ones, and support causes that matter to you.
Conclusion
In 2025, the tax code continues to reward smart giving. If you own stocks, real estate, or other valuable assets that have gone up in value, it might be time to consider gifting appreciated assets: when and how to do it. Whether your goal is to support family or give to charity, understanding the rules will help you make the most of your generosity.
