What should I consider before deciding to donate?

Easement donors should be prepared for several things prior to completion of their donation.

1. Maintenance and Alterations
Owners will be responsible for upkeep and maintenance to the building at all times. Once a year, Easements Atlanta will conduct an inspection. Most repairs are allowed to be completed within a year or before the next inspection, whichever comes first. Owners must have any planned alterations pre-approved as well.

2. Legal and Financial Considerations
Easement donors must discuss prospective tax benefits and questions with their attorney or accountant. Prospective donors should also contact Easements Atlanta for a copy of the standard deed of agreement to study early in the process so that necessary clarifications or modifications can be worked out.

3. Costs of Application and Donation
Costs the owner/donor can expect to incur in the application/donation process are:

  • $1,500 nonrefundable application fee
  • Stewardship fee, which equals 2% of the value of the easement
  • Property appraisal fee
  • Photography fee
  • Property survey fee, if required
  • Preservation consultant fee, if required
  • Accountant and/or tax attorney fee
  • Deed recording fee: approximately $50 depending on the length of the document
  • End-of-year fees: an additional 10% on the donation fee is charged for applications received after October 1; 15% after November 1; 25% after December 1; and 50% after December 15

Donation Process

1. Submit Preservation Easement Application Form
The historic preservation easement donor submits the completed 2-page Preservation Easement Application to Easements Atlanta. Then, the application is promptly reviewed and, if approved, the easement donor is sent an Easement Donation Instructional Package, which includes an Acceptance Letter that must be signed by the easement donor and returned to Easements Atlanta with a non-refundable $1,500 application fee to cover the architectural review, legal fees, and administrative costs.
2. Obtain Certified Historic Designation
To qualify for a historic preservation easement donation and its associated federal tax benefits, a property must be either a certified historic structure or historically important land area. A certified historic structure is a building or structure that is either individually listed in the National Register of Historic Places or deemed to be contributing to the historic significance of a National Register historic district or a certified local historic district. If a building or structure is not a certified historic structure, a certified historic structure designation must be obtained by submitting a nomination to the National Park Service, a division of the U.S. Department of the Interior.

In the case of a building in a registered historic district, to apply for a certification of significance (a determination by the National Park Service as to whether a building is a certified historic structure), a prospective easement donor contacts the State Historic Preservation Office (SHPO) to request a Historic Preservation Certification Application or downloads the application from the National Park Service website. The property owner then completes Part 1 of the application and returns it to the SHPO. The SHPO then forwards the application, along with a recommendation, to the National Park Service, which makes the certification decision. In many cases, the easement donor engages an experienced historic preservation consultant who prepares the NPS application. Upon request, Easements Atlanta can provide a list of experienced historic preservation consultants.

Properties individually listed in the National Register of Historic Places are already recognized as certified historic structures, so a property owner does not need to request a certification from the National Park Service.

3. Subordinate Mortgages
If the easement donor wishes to utilize the tax deduction benefit associated with a historic preservation easement donation, all mortgages (and other encumbrances) must be subordinated to the preservation easement. Since, 1985, the mortgage lenders are required by the IRS to subordinate their rights in the property to the rights of the easement holder, so that in the event of a foreclosure, the preservation easement will not be extinguished. Therefore, if a mortgage exists, a subordination application with a copy of the Preservation Easement Deed must be submitted to each mortgage lender for its approval.
4. Perform Real Estate Appraisal
The preservation easement donor engages a qualified real estate appraiser to perform the appraisal which must be prepared no earlier than 60 days prior to the preservation easement donation date but no later than the due date (including extensions) of the income tax return in which the charitable deduction is first claimed. The value of the preservation easement donation is usually determined by applying the “before and after” valuation approach. Performed by a qualified real estate appraiser, the amount of the charitable deduction is computed by determining the difference between the fair market value of the property before the granting of the preservation easement and the fair market value of the property after the granting of the preservation easement. To facilitate the appraisal process, Easements Atlanta strongly suggests contacting the Appraisal Institute for assistance in finding real estate appraisers familiar with historic properties and preservation easement valuations.

Because each preservation easement valuation depends upon a number of variables that are unique to each property, including existing historic preservation laws that may already impact the property, there is no “one size fits all” approach to valuing preservation easements. For example, the valuation for a facade preservation easement typically ranges anywhere from 5% to 15% of the historic structure’s fair market value. Whereas, the valuations for development rights and interior space preservation easements do not fall within any typical range and, thus, can vary even more significantly from property to property.

5. Convey Preservation Easement
Once all of the aforementioned steps have been completed as well as several additional items listed in the Instructional Package, the easement donor is sent an Easement Donation Closing Package. To initiate the closing process, the easement donor sends the notarized Preservation Easement Deed with the tax-deductible charitable cash contribution (stewardship fee) to Easements Atlanta. In return, Easements Atlanta provides a completed IRS Form 8283 that the easement donor attaches to the income tax return for the year in which the preservation easement is contributed and a deduction is first claimed. Lastly, Easements Atlanta records the Preservation Easement Deed with the county land records office and forwards a copy to the easement donor and mortgage lender(s).

All of these documents are referenced in the steps above, but listed here for your convenience: