It depends if it is deductible. As Carl states, it is not a donation. Nor is it a real estate tax as you mention. However, it can qualify as mortgage interest under certain conditions. The following excerpt is taken from
Publication 530 - IRS.gov (click on link for more information):
Redeemable ground rents. If you make annual or periodic rental payments on a redeemable ground rent, you can deduct the payments as mortgage interest. The ground rent is a redeemable ground rent only if all of the following are true.Ground rent. In some states (such as Maryland), you may buy your home subject to a ground rent. A ground rent is an obligation you assume to pay a fixed amount per year on the property. Under this arrangement, you are leasing (rather than buying) the land on which your home is located.
- Your lease, including renewal periods, is for more than 15 years.
- You can freely assign the lease.
- You have a present or future right (under state or local law) to end the lease and buy the lessor's entire interest in the land by paying a specified amount.
- The lessor's interest in the land is primarily a security interest to protect the rental payments to which he or she is entitled.
Payments made to end the lease and buy the lessor's entire interest in the land aren't redeemable ground rents. You can't deduct them.
Nonredeemable ground rents. Payments on a nonredeemable ground rent aren't mortgage interest. You can deduct them as rent only if they are a business expense or if they are for rental property.
Looking up information on Ocean Grove, NJ, it is unclear if you have a right to purchase (it is a 99-year lease that you may transfer, upon which the lease starts anew). That could disqualify your particular ground rent, but you can check into the exact local structure to be certain.
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