U.S. Clamps Down on Donated Easements

The U.S. government is trying to stamp out abuse of an obscure tax break that allows the owners of historic buildings to take big tax deductions for “donating” to preservation groups a promise to not to alter a property’s exterior, The Washington Post writes.

As part of the effort, the Justice Department is taking legal steps to prevent a Washington preservationist from advising local property owners that they can claim the deduction on the so-called facade easement donation.

Preservation laws in Washington and many other cities already bar unapproved changes to historic homes’ facades – meaning property owners in those locations are claiming a tax break for something they are legally prevented from doing anyway. The government estimates that inflated easement deductions have cost the Treasury $1.2-billion since 2002.

The Justice Department is seeking the names of hundreds of Washington taxpayers who took the deduction and last month filed a civil complaint asking a judge to order Steven McClain and his Trust for Architectural Easements to stop telling homeowners they could write off up to 15 percent of the value of historic properties.

Jeffrey Tenenbaum, a lawyer for the trust, denied any wrongdoing but said the nonprofit group has reached a settlement with the government that “pretty much requires the trust to do what it’s already been doing.”