The Historic Preservation Tax Incentive Program, a federal program created by Congress, allows the owner of a historic property, determined as significant by the U.S. Department of Interior, to donate a historic preservation easement on the exterior of the property to a qualified charitable or governmental organization and, in connection with this donation, be eligible to claim a charitable contribution deduction in an amount equal to the fair market value of the easement, as determined by a qualified, independent appraiser. Questions frequently asked about this donation process include:
Questions and Answers
Can't open this file? Download Adobe Reader.
Select a Question
- What is the Trust for Architectural Easements?
- What is the Federal Historic Preservation Tax Incentive Program?
- What factors caused Congress to pass this legislation?
- What is a historic preservation easement?
- How long does a historic preservation easement last?
- What restrictions are imposed on the property owner?
- What are the tax advantages of donating an easement?
- What is the value of a historic preservation easement and how is it determined?
- How does the public benefit from the donation of a historic preservation easement?
- What are the Trust for Architectural Easements' accomplishments thus far with respect to the acceptance and protection of easement donations?
- What are the Trust for Architectural Easements' accomplishments thus far, outside the acceptance and protection of easement donations?
- What are the steps involved in making a donation of a historic preservation easement to the Trust for Architectural Easements?
- How can I determine if a property is eligible?
- Why should someone get a tax deduction on an easement donation in a historic district when local ordinances prohibit what are essentially the same kinds of actions prohibited by the easement?
- Has the Trust for Architectural Easements accepted easements on properties that are not protected by local ordinances?
- How does this program compare to the Rehabilitation Tax Credit program?
- Is there a cash outlay associated with making an easement donation?
- What criteria does the Trust use when reviewing a proposed change?
- How long does it take to receive approval from the Trust for a proposed exterior change to a property?
- Is an easement property open to the public?
- What must I do before beginning maintenance projects on my property?
- What must I do to initiate the donation process?
What is the Trust for Architectural Easements?
The Trust for Architectural Easements is a 501 (c)(3) charitable organization dedicated to historic preservation. The Trust achieves its mission primarily by accepting historic preservation easements and cash contributions, providing grants to be used toward community service projects in the historic districts it serves, assisting communities in obtaining certification of historically significant districts and properties on the National Register of Historic Places, and educating the public on the importance of preserving America’s architectural heritage.
What is the Federal Historic Preservation Tax Incentive Program?
The Federal Historic Preservation Tax Incentive Program is a program promulgated by Internal Revenue Code section 170(h) that allows an owner of an eligible historic property to donate a historic preservation easement on the exterior of the property to a qualified charitable or governmental organization and, in connection with this donation, be eligible to claim a charitable contribution deduction in an amount equal to the fair market value of the easement, as determined by a qualified, independent appraiser. Certain provisions of section 170(h) of the Internal Revenue Code were recently amended. On August 17, 2006, President Bush signed into law legislation that provides new incentives and safeguards for the Federal Historic Preservation Tax Incentive Program. The law reinforces public confidence in and expands the usefulness of the Program. Please go to the Trust's IRS Update or the IRS Website for more information regarding changes to the legislation.
What factors caused Congress to pass this legislation?
The Federal Historic Preservation Tax Incentive Program was instituted because alarming numbers of historic communities were lost forever in the name of urban renewal. To counter this trend, legislation was established in 1966, 1976, 1980, and 2006; this legislation serves as the basis for the program. Congress’ concern that local ordinances fail to adequately protect historic properties is as valid today as it was when the legislation was first enacted. According to a survey by the National Alliance of Preservation Commissions, approximately forty percent of local oversight commissions lack the authority to enforce decisions and many preservation commissions lack sufficient funding or staff to monitor those properties they are charged with overseeing.What is a historic preservation easement?
A historic preservation easement is a voluntary, legal agreement made between a property owner and a qualified, non-profit historic preservation organization to protect a significant historic building in perpetuity.How long does a historic preservation easement last?
The main purpose of a historic preservation easement is to guarantee forever the protection of the property’s architectural integrity. As a result, the tax code requires that the easement be granted in perpetuity for the donation to be tax-deductible. To ensure perpetuity, the easement agreement will be recorded in local land records to provide notice of the preservation restrictions to all future purchasers.
What restrictions are imposed on the property owner?
By granting an easement, the owner and future owners of the building agree not to change the exterior of the building, including its front, side, and rear façades, along with its height, without the permission of the easement-holding organization. Specifically, the restrictions require that the property owner receive the consent of the Trust before any exterior modifications are made that will change the appearance of the building’s front, rear and side façades, or that will change the building’s height.
What are the tax advantages of donating an easement?
The donation of a historic preservation easement is recognized as a non-cash charitable contribution under the tax code. The donation amount is based on the fair market value of the easement donation, as determined by a qualified, independent appraiser and may be deducted from the owner’s federal income taxes in the same manner as other charitable contributions. In many cases, this deduction applies to state and local income taxes as well. The Trust recommends donors consult with their own tax advisors regarding the specific requirements of claiming a tax deduction in connection with a historic preservation easement donation. The Trust does not provide tax advice to easement donors.What is the value of a historic preservation easement and how is it determined?
The value of the easement is determined by a qualified, independent appraiser and is generally based on the difference between the value of the property before the easement donation and the value of the property after the easement donation. U.S. Tax Court cases have generally stated that the easement value must be based on the facts of a particular appraisal situation, and not on a predetermined formula. Copies of past US Tax Court cases addressing the valuation of historic preservation easements are available at the Trust's Case Law Summary.
In the past two years, easement valuation has come under increased scrutiny by the IRS. IRS Notices and other communications pertaining to easement valuation are available at the IRS Website and at the Trust's IRS Update. It is important for property owners to review this information with their own legal and/or tax advisors prior to making an easement donation.
How does the public benefit from the donation of a historic preservation easement?
The Federal Historic Preservation Tax Incentive Program, which allows for tax-deductible easement donations, is excellent public policy because:
• The Program is an effective method of encouraging owners of historically significant properties to make historic preservation easement donations. The terms of the easement donation require that the donor and future owners of the property properly maintain the historic exterior of the property and prohibit historically inconsistent alteration of the exterior and demolition of the structure. Such requirements ensure that properties subject to a historic preservation easement are preserved for the public’s viewing and enjoyment forever.
• Historic preservation easements further our country’s efforts to preserve historically significant properties and neighborhoods, by creating a system of oversight, regulation and enforcement that is separate from local government preservation efforts, which are often subject to financial limitations and political influences. When an independent charitable organization receives a donation of a historic preservation easement, it is bound by the terms of the easement and in furtherance of its mission to protect the historic exterior of the subject property in perpetuity for the benefit of the community.
• By preserving historically significant properties and neighborhoods through historic preservation easements, such properties and neighborhoods can be used as a living artifact to educate the public about an American building or neighborhood’s history, culture and heritage.
• The visible maintenance and preservation of only a few historic residences in a single neighborhood, resulting from donations of historic preservation easements, can have a positive influence and foster voluntary preservation of the remainder of the homes in the historic neighborhood.
What are the Trust for Architectural Easements' accomplishments thus far with respect to the acceptance and protection of easement donations?
The Trust holds more than 800 easements and has a Stewardship Fund of more than $18 million to ensure the protection of these historic resources in perpetuity. The Trust currently conducts a physical review of each protected property annually and more frequently if needed to assess change requests or to monitor change implementations. The Trust currently serves historic communities in Connecticut, Illinois, Maryland, Massachusetts, New Jersey, New York and Virginia. The Trust plans to expand its preservation efforts to additional communities.
What are the Trust for Architectural Easements' accomplishments thus far, outside the acceptance and protection of easement donations?
The Trust allocates part of its resources towards public education on architectural and historic values. For example, the Trust worked with the Museum of Modern Art (MoMA) in New York City and selected elementary and secondary schools in the states it serves to develop programs and curricula to educate students about the architecture of the United States, and to build further awareness about the need for its preservation. The instructional guide and student activities may be downloaded as a PDF on MOMA's Website.
The Trust also supports local initiatives to restore the character of historic neighborhoods. The Trust has provided grants to community groups in New York City’s Greenwich Village and NOHO, and has worked with the city’s transportation department to restore the neighborhoods’ historic granite cobblestone streets. The Trust has also provided financial support to community groups working to preserve and restore historic neighborhood parks in New York City and Boston. Canal Park, (between Canal Street and West Side Highway), and James Bogardus Triangle Park, (at the intersection of Hudson Street, West Broadway, and Chambers Street) are two examples of parks that the Trust has helped restore and preserve in New York City. The Trust also helped to restore Hiscock Park in Boston’s South End historic district.
America’s architectural heritage includes the memorials and monuments that have been created to recognize America’s heroes or commemorate specific historic events. The Trust supports the restoration and preservation of these memorials through its educational grant program. In New York City, the Trust provided a grant to the Arts and Antiquities unit of the Parks Department’s Citywide Monuments Conservation Program. This grant gave students an opportunity to learn the rare skills of sculpture conservation and restoration and also provided important maintenance for part of New York City’s architectural heritage. For more information on the Trust’s grant program, please contact the Trust at info@architecturaltrust.org.
In addition to promoting preservation in existing historic districts, the Trust is also an effective ally for historic communities that are working to obtain federal certification or a listing in the National Register of Historic Places. The Trust has assisted with these efforts in the following communities:
Maryland
Reservoir Hill (Certified in 2004)
Massachusetts
Beacon Hill (Update to the listing, April 2007)
New York
Wall Street (Listed in March 2007)
Treadwell Farm (Listed in 2004)
Riverside/West End (Certified in 2004)
Madison Square North (Certified in 2004)
Carnegie Hill (Certified in 2003)
Ladies’ Mile (Listed in 2003)
NOHO East (Certified in 2003)
Metropolitan Museum District (Certified in 2002)
The Trust has also helped to obtain individual listing for the following properties in the National Register of Historic Places.
Massachusetts
Boston Transit Commission Building (former) (Listed in 2007)
New York
304 Park Avenue South (Listed in 2005)
R.C. Williams Warehouse (Listed in 2005)
Blum and Blum Lofts (Listed in 2004)
Fred F. French Building (Listed in 2004)
General Electric Building (former) (Listed in 2004)
Look Building (former) (Listed in 2004)
What are the steps involved in making a donation of a historic preservation easement to the Trust for Architectural Easements?
1) The donor meets with a representative of the Trust, preferably at the property on which the easement is to be placed.
2) The donor submits an application to the Trust providing the Trust with basic information about the property; a refundable initial deposit of $1,000, payable by check or by credit card, accompanies the application.
3) The Trust assists the donor in obtaining certification from the National Park Service that the property is historically significant.
4) If the property is mortgaged, the Trust will work with the donor and the donor's mortgage lender(s) to obtain a subordination agreement from each mortgage lender.
5) Once historic significance certification and lender subordination have been received, the donor is advised to obtain an independent appraisal of the historic preservation easement from a qualified appraiser. If requested, the Trust can provide the donor with a list of qualified, professional appraisers who have appraised properties for historic preservation easement donations in his or her area in the past. The appraiser sends copies of the appraisal both to the donor and to the Trust.
6) Upon receipt of the appraisal, the Trust sends the donor a closing package that includes the final easement agreement (the “easement”) for signature and notarization, local recording forms for signature and notarization, and the amount of the cash contribution requested to accompany the easement donation for the purpose of funding current operations and future monitoring.
7) Upon receipt of the documents in the closing package, the Trust accepts the easement donation, and sends the donor a letter of acknowledgement (acknowledging both the donation of the easement and the donation of the cash contribution), along with the required documentation for tax filing purposes.
8) The Trust records the easement in the local land records.
9) Annually, thereafter, and as needed to monitor requested changes, the Trust inspects the exterior of the property to ensure its compliance with easement restrictions.
How can I determine if a property is eligible?
To be eligible, the property must either be located in a historic district that is listed on the National Register of Historic Places, or be separately identified on the National Register as a “Landmark Property.” For properties in a National Register Historic District, the property must have been one of the contributing properties at the time the district was established or extended. There are no restrictions as to the use of the property (it may, for example, be a single or multi-family residence, or a commercial, industrial or institutional building) or its fair market value (the property may be valued from the tens of thousands to the tens of millions of dollars). For information regarding historic districts and landmarks listed on the National Register, please visit the National Park Service Website or contact your local Trust representative at 1-888-831-2107.
Why should someone get a tax deduction on an easement donation in a historic district when local ordinances prohibit what are essentially the same kinds of actions prohibited by the easement?
Easement donations represent binding agreements between property owners and the Trust for Architectural Easements and cannot be amended or terminated. Such easements are binding upon future owners of the eased property and thus, the properties are restricted in perpetuity. Local ordinances, however, can be revoked at any time. Moreover, unlike some local ordinances, easements granted to the Trust go further than just prohibiting changes; they prohibit demolition-by-neglect and require that the structural integrity of the entire building be preserved along with the historic façade. The Trust's easements are monitored regularly and enforced faithfully, free of economic or political influences that often interfere with the regulation and enforcement of local ordinances. In addition, many local government agencies tasked with enforcing local ordinances do not have adequate funding to effectively monitor and enforce the ordinances. The Trust for Architectural Easements, on the other hand, maintains a stewardship fund of greater than $18 million to ensure funding to monitor and enforce the easements it holds. Further, according to a survey by the National Alliance of Preservation Commissions, approximately forty percent of all preservation commissions lack enforcement ability. Many also lack the proper procedures to monitor the properties within their jurisdiction. A research document - The Case for Preservation Easements prepared by architectural historian Anthony Robins of Thompson & Columbus, Inc., provides a thorough analysis of why federal historic preservation protections remain a necessity even where local preservation protections exist. This report is available on the Trust’s website at
The Case for Preservation Easements
Can't open this file? Download Adobe Reader.
Has the Trust for Architectural Easements accepted easements on properties that are not protected by local ordinances?
Yes. Our mission is to protect as many historically significant properties, as determined by the National Park Service, as possible.
How does this program compare to the Rehabilitation Tax Credit program?
Both programs stem from the same legislation, and both provide benefits to the historic preservation effort. The Rehabilitation Tax Credit program provides a twenty percent tax credit for actual expenses incurred to rehabilitate qualified historic properties. The Rehabilitation Tax Credit program, however, only applies to income-producing properties, and after five years, no longer provides enforceable protection for the historic preservation of the property. The Federal Historic Preservation Tax Incentive Program applies to all qualifying historic properties, regardless of use (residential, multi-unit residential, commercial), and provides protection over the historically significant features of the properties’ exterior in perpetuity.Is there a cash outlay associated with making an easement donation?
Yes. The cash outlay includes an appraisal fee, possible bank service charges for subordination and a cash contribution to the Trust to serve as funding for monitoring the property in perpetuity. The Trust recommends consulting with a tax advisor regarding the deductibility of the fees and contribution relating to a historic preservation easement donation.What criteria does the Trust use when reviewing a proposed change?
In general, a proposed change is acceptable if it meets standards set by the U.S. Department of Interior and is consistent with the property’s original architectural style. Change request approvals are granted on a case-by-case basis. See Preservation Guidelines for more information.
How long does it take to receive approval from the Trust for a proposed exterior change to a property?
The Trust will normally respond within 30 days to all such requests. In the circumstance where the changes are of a large scale and more time is needed for their review, the Trust will promptly inform the owner as to when he or she can expect a final decision.
Is an easement property open to the public?
The easement does not grant physical public access to the property. The owner’s “gift to the street” protects only the exterior of the historically significant property. The property must, however, remain visible to the public from any adjacent public rights-of-way.What must I do before beginning maintenance projects on my property?
Such work does not require the prior approval of the Trust, provided that no changes are made to the exterior appearance of the protected façade. When completing such projects, the Trust recommends that the standards and guidelines set by the U.S. Department of Interior be followed whenever possible.What must I do to initiate the donation process?
Contact the Trust toll free at 1-888-831-2107 or by email at info@architecturaltrust.org.
