I’ve seen statements to the effect that IRS guidelines provide that façade easements are worth 10-15 percent of the value of a particular property . . . is this true?Updated 2/21/2008
Not necessarily. Neither easement donors nor easement-holding organizations should rely on such statements. Easement values may far exceed or be far less than a 10-15 percent range, depending on the circumstances.
At one time, an article authored by an IRS analyst stated that the “proper valuation of a façade easement should range from approximately 10-15 percent of the value of the property.” In addition, a similar statement was included in an older version of an IRS audit guide. These materials have been interpreted by some to suggest that the IRS had accepted this valuation range for façade easements, despite the fact that the applicable IRS regulations have long made it clear that easement valuation depends on a number of factors, and that the value of easements is likely to vary from property to property and from easement to easement. In recent months, the IRS has removed this language from its materials, and IRS officials have cautioned that the promotion of this type of valuation range may, in fact, be misleading.