Finding the perfect gift for your loved ones can often be challenging, especially when it feels like they have everything they could need.
Gifting them an NFT is a perfect solution – these non-fungible tokens will generally grow in value, and you can also create a customized NFT to show them how much you love them.
Can You Gift Someone An NFT?
So few people gift NFTs simply because they do not know they can gift NFTs.
Gifting NFTs is easy. There are several ways to make this gift. The most popular is to transfer NFTs directly into your giftee’s crypto wallet or to use the OpenSea website to make the transfer.
How to Transfer NFTs via OpenSea?
Transferring NFTs through OpenSea is relatively easy. You first need to ensure the NFT you want to gift is available in your OpenSea account. If the NFT you’d like to gift is stored in another crypto wallet, first transfer it to OpenSea.
Once you see the NFT on OpenSea, you should then:
- Click the three-dot menu at the bottom left on the NFT you want to transfer
- Click Transfer (or the gift icon)
- Confirm your decision and click Continue
- Provide the recipient’s wallet address
- Press “Send Items”
- When the webpage asks for your signature, confirm it
- Once the NFT has been transferred, you’ll see a confirmation message
Why You Need the Recipient’s Wallet Address
The biggest issue when transferring NFTs as a gift is the need to know your giftee’s wallet address.
The reason you need this address is simple – without having the other person’s wallet address, there is nowhere for you to transfer the NFT. An NFT is a digital product and, therefore, cannot be sent to a physical address or hardware wallets that aren’t connected to the internet.
This means the first time you transfer an NFT to someone, it will not necessarily be a surprise. You will have to ask for their wallet address.
However, if you still want to surprise the person, you can transfer NFTs without letting them know beforehand, thus ensuring you still have the element of surprise.
Things to Keep in Mind When Gifting an NFT
There are some things you need to keep in mind when you gift an NFT.
Gas Fees
Like mining an NFT, transferring/gifting NFTs is essentially a transaction on the blockchain. This transaction takes energy from the marketplace, so they require you to pay a small fee to enable the transfer. This fee is known as a gas fee.
Owning Ethereum
Most transactions on NFT marketplaces take place using Ethereum. So, suppose you don’t have Ethereum coins and an Ethereum wallet (this generally happens when a person is looking to gift an NFT held outside a marketplace like OpenSea). In that case, you’ll need to figure that out before making any transactions and transfers via NFT marketplaces.
If you don’t use Ethereum much in other parts of your life, calculate how much you’ll spend buying the NFT you’re gifting, and consider the estimated gas fee to buy and transfer the NFT. Purchase just a little more Ethereum than that – this gives you wiggle room if the gas fees are higher and ensures you don’t have too much leftover Ethereum that you have nothing to do with.
If the Recipient Owns a Crypto Wallet
Next (and perhaps most important), you should ensure your giftee has a crypto wallet you can send the NFT. If they do not have any crypto wallets, there is nowhere for you to send them – and unless you can convince them to acquire a crypto wallet and give you their wallet address, you’ll have to figure out something else to gift them.
Tax Implications
Finally, you should also consider the tax implications of your gift.
Like any other gifts, if the NFTs you are transferring are worth over $16,000, they are taxable. NFTs priced lower are not taxable events when you make the transfer.
However, should your giftee choose to sell the NFT you gift them, they will have to pay capital gains tax (the exact percentage can be anywhere from 0-28%).
From your side, there’s the fact that you’re making transactions in cryptocurrencies (such as the network fees and the crypto you use to purchase the NFT you’re gifting). Because cryptocurrencies change in price, they’re generally treated as assets. This means the exchange rate every time you buy an NFT (or anything else with your crypto) has to be considered.
For example, let’s consider Ethereum since that’s the blockchain technology that most NFT marketplaces use.
Let us pretend you bought 1 Ethereum for about $3,000. To make things easy, let us also pretend you bought the NFT you will gift for 1 Ethereum. However, when you bought the NFT, the value of 1 Ethereum was $1,500, not the $3,000 it was when you bought the currency.
Because the currency depreciated at the time you used it, it triggered a taxable event if you live in the United States. Similarly, if the currency were to have appreciated (that is, it was worth $4,000 when you bought the NFT rather than $1,500 – more than you spent buying it), it would also have constituted a taxable event.
Most financial planning experts recommend speaking to a tax advisor before gifting an NFT or buying one.
Additionally, you should consider whether your giftee will appreciate being gifted an NFT. It’s always best to gift something that the recipient will appreciate rather than something that will be more work for them.
This isn’t to say gifting NFTs should never be done. Many people will be thrilled to have a friend transfer an NFT to them as a gift. However, this isn’t the case for everyone, and you should always consider your giftee preferences when making this decision.
Final Thoughts
Gifting an NFT on OpenSea is relatively easy. All you need is the NFT that you plan to gift, the wallet address for the recipient’s digital wallet, and some Ethereum to pay for the transaction fees. Once you have these, you can transfer NFTs with a few clicks of a button.
However, it’s essential to remember that NFTs come with tax implications. Make sure your giftee is ready and able to handle these implications, or your gift may be more work than expected.
