Update on Easements and Taxes

Photo by John-Morgan.

A couple weeks ago, GM alerted you about potential problems with taking a tax write-off for donating a preservation easement on your house. What inspired the notice was that the Department of Justice won a lawsuit against an organization that was accepting easements and informing people that they could write-off up to 15% of the value of the home in doing so.

The thrust of DOJ’s action was that the trust was misleading people when it told them they could write-off that much. But GM mistakenly conflated that argument with the fact that the IRS itself is highly dubious that easements have any value and thus should not provide any tax write-offs, particularly if the home is protected by historic preservation laws. GM argued that that was faulty logic because preservation easements do in fact offer stronger protections than the laws do.

While the IRS has argued this point (and started many audits over it), it turns out that another court recently sided with GM’s view. The case is Simmons v. Commissioner and in it the DC Circuit rejected many of the IRS’ attempts to delegitimize write-offs for preservation easements. It’s a rather complicated decision, and if you are interested in writing-off the value of an easement, you should discuss it with your tax advisor (or start by reading this blog).

So please don’t let the uncertainty over the tax issue prevent you from donating an easement. The DOJ case was against one bad apple. We have several legitimate trusts operating in Georgetown (including the L’Enfant Trust and the Trust For The Preservation of Historic Georgetown) and you should feel comfortable working with them.



Filed under Preservation

2 responses to “Update on Easements and Taxes

  1. Pingback: Morning Links: Who Gets What - Housing Complex - Washington City Paper

  2. In your reference to “legitimate trusts operating in Georgetown”, please note that besides L’Enfant Trust, the other organization to which you refer is actually named Foundation for the Preservation of Historic Georgetown http://www.preservegeorgetown.org.
    Peter H. Jost
    Foundation for the Preservation of Historic Geogrgetown

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