11:56:34 | 2012-05-17
(New York, NY) — Nestled below Canal Street in New York City; is the Tribeca North Historic District. This little corner of Manhattan not only holds a certain charm with its historic buildings and brownstones along every block, but according to Forbes it is also the seventh most expensive zip code in the country.
In this high-priced real estate haven is the Cobblestone Loft Condominium; a building that has recently been at the center of controversy involving the NAT and the U.S. Tax Court.
The New York condominium building recently made a historical preservation easement donation after the building owners granted the easement to the National Architectural Trust (NAT). In an attempt to preserve the building’s current state, the facade easement deed prevented the Cobblestone Loft Condominium from doing any remodeling of the building facade without permission from the NAT. This included making any alterations to the building or doing any type of construction. In turn for their cooperation with the endeavor, the condominium owners were told that they could deduct around 10-15 % of the value of their high-end condominiums as a charitable contribution. The condo owners were also instruction to make charitable contributions to the NAT; this was to cover monitoring of the building as well as other associated fees.
At the time of the easement a valuation was made, stating that the easement was valued at over $8 million, or 12 percent of the appraised value of the Cobblestone Loft Condominiums. However, after the Tribeca condominium owners cooperated with the regulations put in place by the NAT; they quickly found that the U.S. Tax Court held the value of the easement at zero dollars; meaning all the deductions made were disallowed. The issue boiled down to a problem with adequate disclosure as petitioners did not complete all portions of the Forms 8283.
Eventually, throughout a lengthy process the Tax Court cut the taxpayers a break. However, the case did bring attention to these preservation initiatives. Particularly in cities like New York; property owners who wan’t to preserve a building in its present form, can make a great deal of money from a conservation easement. However, with the recent valuation issues brought to light with the Cobblestone Loft Condominium issue, New Yorkers are seeing that reading the instructions with these easements is extremely important as failing to do so can result in a significant loss of potential income.