If you own a home or another building in a historic preservation district, consider donating a conservation easement to a local preservation society. In essence, you’ll agree to never change the facade of the building.
You can get a tax deduction if you obtain before-and-after appraisals. Say your building was worth $1 million but the inability to change the facade reduces its value to $850,000; then the donation to the preservation society is $150,000.
There are limits to the amounts you may deduct each year for charitable contributions. Generally charitable contribution deductions of conservation easements are limited to 30 percent of a donor’s adjusted gross income (AGI), with the excess carried forward five years.
Thus, if your AGI is $100,000, you can take a $30,000 deduction each year for five years, until you take $150,000 worth. Moreover, those deductions can be taken against the alternative minimum tax (AMT) as well as against the regular income tax, so that issue won’t be a concern.
