What is a Historic Preservation Easement?
A historic preservation easement is a voluntary legal deed agreement, which permanently protects a significant historic property. A property owner places specific restrictions on the property and transfers these restrictions to a qualified organization whose mission includes historic preservation, such as Easements Atlanta, Inc. It allows a property owner to retain private ownership of the property while ensuring that the historic character of the property will be preserved through a perpetual easement. In addition, an owner who donates a historic preservation easement may be eligible for one or more tax benefits.
What are the Benefits of Donating an Easement
Through the gift of a preservation easement the owner can have the satisfaction of knowing that the property will be preserved as part of our architectural heritage for future generations to enjoy. The easement restrictions become part of the property’s chain of title and “run with the land” in perpetuity, thus binding not only the owner who grants the easement but all future owners as well. Such an easement insures a property’s preservation more effectively than zoning or historic designation.
In addition to public benefit and personal satisfaction, the donation of a preservation easement may bring the donor income tax savings. Qualified gifts allow donors to take federal and state income tax deductions, and the donation may reduce federal estate taxes and local property taxes. In some cases, heirs benefit from an easement donation because the gift lowers the value of the estate and the estate taxes. Taxes on gifts of property could also be less if the property is encumbered by a preservation easement. Additionally, the property tax assessment of an easement-restricted historic structure could be reduced from the pre-easement assessment where property tax assessment is based on a property’s highest and best use. Since the rules are complex, property owners interested in the potential tax benefits of an easement donation should consult with their accountant or tax attorney.
The easement restrictions become part of the property’s chain of title and “run with the land” in perpetuity, thus binding not only the owner who grants the easement but all future owners as well.
The easement restrictions become part of the property’s chain of title and “run with the land” in perpetuity, thus binding not only the owner who grants the easement but all future owners as well.
What Property Qualifies?
A qualifying property is considered a certified historic structure if it is a building, structure, or land area individually listed in the National Register of Historic Places, or if it is a building located in a registered historic district and is certified by the National Park Service as contributing to the historic significance of that district. A registered historic district includes any district listed in the National Register of Historic Places. A State or local historic district may also qualify as a registered historic district, provided the district and the enabling statute are certified by the National Park Service. The property must be certified by the National Park Service either by the time of the transfer of the easement or the due date (including extensions) for filing the Federal income tax return for the taxable year of the easement donation.
Unlike the deduction for preservation of properties located in a historic district, charitable contribution deductions for preservation easements on properties individually listed in the National Register are not restricted to protection of buildings but may also be allowed for easements on historic structures or land areas without buildings. Examples of qualifying structures may include bridges, dams, or roller coasters. Historically important land areas include either independently significant areas, including any related historic resources, that meet the National Register of Historic Places Criteria for Evaluation, or land areas adjacent to a property individually listed in the National Register of Historic Places, where physical or environmental features of the land contribute to the historic or cultural integrity of the historic property. Common examples of historically important land areas include traditional cultural places, and historic cultural and designed landscapes.