In most locations, the entire donation process takes three to four months to complete. In Massachusetts, the process often takes nine months to complete.
Prior to beginning this process, the Trust recommends that you meet with your attorney and tax advisor to discuss your plan to make a historic preservation easement donation, the requirements the easement will place on your property and the eligibility requirements for claiming a tax deduction relating to this donation.
The first step of the process is to meet with a representative of the Trust. S/he will answer any questions you have concerning the program, assist you in the completion of an application, discuss with you the cash contribution requested by the Trust, and take digital photographs of your property. Your application must include information about any mortgages on the property, including the loan number.
When you submit your application, you will be asked to provide a $1,000 deposit that may be paid by check or credit card. This amount will be refunded to you if the Trust is unable to secure the necessary certifications and approvals needed to qualify your property for the donation. With your authorization, your deposit will be applied against your cash contribution when the easement donation is finalized.
The next step involves the Trust completing several actions on your behalf. First, it will seek certification that your property contributes to the historic district in which it is located from the state and federal governments. Second, it will request subordination of your mortgage to the easement from your lender(s), if you have a mortgage.
Once the necessary approvals are complete, the next step is for you to obtain a qualified appraisal from an independent, qualified appraiser. The appraisal determines both the fair market value of the property and the value of the easement, which is the value of the charitable donation for tax purposes. Upon request, the Trust will provide you with a list of independent appraisers experienced in the valuation of easements. The Appraisal Institute also offers a directory of appraisers.
The easement appraiser you select must be a “qualified appraiser” capable of completing a “qualified appraisal” that conforms with the requirements of Internal Revenue Code 170(h) and related regulations. Guidance relating to the valuation of noncash charitable contributions, including the definitions of “qualified appraiser” and “qualified appraisal,” has been issued by the IRS in Publication 561, Chief Counsel Memorandum 200738013, and Reg. 140029-07 as published in the Federal Register. To meet our obligations as an easement-holding organization, the Trust has established an appraisal review process. It is important to note that the review will not consider or provide any comment with regard to the opinion of value. Results of the review of your appraisal should not be relied upon by you. It is your responsibility, either individually or through your tax advisor, to determine if the appraisal constitutes a “qualified appraisal.”
Once the appraisal is complete, the Trust will send you a closing package. You will need to sign and notarize the easement and recordation forms, complete your cash contribution, and return the package to the Trust. Once all documentation has been received and verified by the Trust, we will submit your easement for recordation with the appropriate land records office in your jurisdiction. After the easement is recorded, the Trust will provide you with the date of submission for recordation, which you should provide to your appraiser for use in the final appraisal report.
Shortly after the final appraisal is complete, you will receive the signed IRS Form 8283 and a copy of the recorded easement from the Trust. If you are eligible and choose to receive a bronze plaque, the Trust will also provide you with one for display on your property.