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Nail down deductions for building façades

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in Small Business Tax

The Pension Protection Act of 2006 imposes new requirements for deducting donations of conservation easements on building exteriors located in historic districts. It also tightens the reporting rules for such donations. That makes it tougher to claim charitable deductions for façade easements … but not impossible.

Strategy: Make your move now. Otherwise, you could be stuck paying an extra $500 “filing fee.”

As with the historic structures credit, a building may qualify for a charitable deduction if it’s located in a registered historic district and certified by the U.S. Interior Department as being historically significant. For contributions made after July 25, 2006, the new law requires that:

  • The building’s exterior (including front, sides, rear and height) is preserved consistent with the historical character.
  • The donor and a qualified charity enter into a valid written agreement.
  • You provide a qualified appraisal with your tax return; photographs of the entire exterior of the building; and a description of all restrictions (e.g., zoning laws) on the building’s development. This requirement applies to contributions made after Aug. 17, 2006.

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