I’ve recently been solicited to make an easement donation . . . what do I need to know?
Updated February 21, 2008First, you should know the organization you are dealing with. Obviously, it is important to ensure that the easement-holding organization to which you plan to donate an easement is a qualified preservation organization under state and federal law. But beyond this, because you care about the long term future of your historic property, the organization should also have the commitment, capacity and experience to monitor and enforce the easement over time. The organization should have a track-record that shows its commitment to historic preservation, and it should be structured in a manner that meets modern governance standards for nonprofit organizations.
Second, do not rely on promotional materials for tax or legal advice. Promotional materials may oversimplify the tax benefits for easement donations – for example, by suggesting standard percentage ranges for easement valuation, or by providing deduction “estimators” based on a standard percentage. Prospective donors should obtain qualified and independent advice from competent professionals, including qualified appraisers.
Third, don’t overvalue the tax deduction. Depending on the circumstances, easements that do little more than replicate the terms of an existing local landmarks law may not provide significant tax deductions. Deductions claimed for overvalued easements may be disallowed, and donors may be subject to penalties by the IRS.
