Capital Gains

Did you recently make a nice profit on a stock or real estate sale? How do you plan to replace the income that those investments had generated? Plus you canít forget about the tax bite that youíre facing. A charitable gift annuity (CGA) might possibly solve these problems, and at the same time let you help your favorite charity. 

A CGA is a direct contract with a charity. The donor makes the gift, and the nonprofit agrees to provide an income based on the life expectancy of one or two people. Gifts would become part of the organizationís assets and the promise of future payments part of the charityís liabilities.

The cash that you put into a CGA will earn you an income tax deduction of up to 50% of your adjusted gross income. This can help offset the gain that you realized from your investment sale. Another tax benefit with a CGA is that part of each distribution is considered a tax-free return of principal.

The amount of the payments is based on the size of the initial investment, the age of the beneficiaries, and the prevailing interest rates. For example, if you are single, 70 years old, and invest $10,000 in a CGA, you might possibly receive a $720 annual income for the rest of your life and a one-time $3,660 tax deduction. Per AARP Bulletin, most charities use standardized tables for payouts depending on age of annuitant.


Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, or investment advice.  Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary therefore, the information should be relied upon when coordinated with individual professional advice.