06 Nov Can I buy a car by trading appreciated securities?

Q. I know that I can donate appreciated securities to a charitable organization to avoid the tax hit I would incur by selling the appreciated securities and donating the resulting cash. But what if I want to make a major purchase like a car? Can I do the same kind of transaction?
— Hoping to save

A. You’re correct that you can donate appreciated investments directly to a charity.

If you do that, rather than sell the investments and give the cash to the charity, you avoid paying capital gains tax on the investment’s gains.

But no, you can’t do what you’re suggesting.

“You are not able to purchase a car directly from your IRA and avoid taxes,” said Jody D’Agostini, a certified financial planner with AXA Advisors/The Falcon Financial Group in Morristown.

Nor can you gift securities to a car dealer, or any other business, in exchange for a product to avoid the taxes that would be due when you sold the investment.

Nice try, though!

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This story was originally published on Nov. 6, 2019.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.