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    Category Archives: Real Estate

    Giving Real Estate to Charity? Remember the Appraisal!

    A California entrepreneur got a harsh lesson on the rules of charitable contributions…when the U.S. Tax Court denied his $18.5 million deduction for real estate donations—not because he inflated their values, but because he didn't follow the rules.

    When it comes to charitable giving success, you must dot all the i’s and cross all the t’s. Remember, with the IRS and the tax court, the devil truly is in the details.

    This was the lesson Joseph Mohamed, Sr., a generous (and wealthy) real estate developer, recently learned. Rueters recently reported on his case in an article titled “A harsh lesson on charitable contributions.”  

    It seems Mr. Mohamed had more than the requisite charitable intent but failed to follow the strict rules required to claim the deduction for his generous contribution of real estate worth in excess of $18.5 million. The problem? If you make a charitable contribution in the form of real property worth more than $5,000, then the real estate must be properly appraised and the appraisal must accompany the donation form.

    Unfortunately, Mr. Mohamed (who, ironically, is a certified appraiser) failed to follow this fundamental requirement. Even though the tax court conceded that the real estate in question likely was worth at least $18.5 million, the deduction was not granted.

    Contact Meier Law Firm to discuss the best strategies for giving money to charities.

    Reference: Reuters (June 1, 2012) “A harsh lesson on charitable contributions

    Using Easements to Preserve Posterity Property

    Sometimes one of the greatest charitable gifts you can bestow is the mere promise not to do anything with, or to, what you own. Of course, this common conundrum occurs most frequently when you happen to be sitting on a piece of history.

    Whether the property is in the country or in the city, the challenge is the same: how to protect the property from development in perpetuity. Sometimes, however, the key is convincing the IRS of the charitable value of the property itself. If you have an asset worth this kind of consideration, and the hope to preserve it, then an “easement” may be necessary.

    In the city there are “façade” easements, and in the country there are “conservation” easements. Both are worthwhile means to a charitable end.

    Consider Peter Reilly’s recent post in Forbes, titled “Donating TriBeCa Facade Easement Is Like Renouncing Your Super Powers,” about an illustrative case in TriBeCa, Manhattan. The story highlights some possible, practical complications that may arise when the situation seems too good to be true. After all, an easement is a unique way of giving to charity and your neighborhood, but only when the IRS agrees.

    A practical concern, if successful in obtaining the easement with IRS approval, is in finding a charity to enforce your charitable gift and the easement of your property.

    Ultimately, the end result may be worth the work if you preserve your posterity property in perpetuity from development in the hands of an inevitable McDonalds or Starbucks franchisee. The charitable tax deduction can come in handy, to boot.

    Contact Meier Law Firm today to plan for your loved ones.

    Reference: Forbes (May 7, 2012 “Donating TriBeCa Facade Easement Is Like Renouncing Your Super Powers

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