A preservation or conservation easement is a way to ensure the continued preservation of historic buildings, sites, structures, and even archeological ruins. The donation of such easements is a purely voluntary means for property owners to preserve these important landmarks while being able to realized what may amount to substantial tax savings a result of the donation.
An easement is a partial interest or limited right in the use of a property, which is legally granted by he owner to another party. A familiar example of an easement is a right of way. When a property owner grants a preservation or conservation easement (the terms are often interchangeable) the owner is not, however, giving a neighbor the right to cross his or her land, as with a right-of-way. instead, the owner grants to an organization like the Colorado historical Foundation the right an, in fact, the obligation to ensure that the property's historic character is forever preserved.
The donation of a preservation easement does not mean that the property owner surrenders ownership of the property, nor does it prevent the future sale of the property. A preservation easement on a historic building does mean that it cannot be demolished, that any changes to the exterior appearance of the building must be approved by the Foundation, and that it must be maintained in good condition.
A preservation easement may be given on any property that is listed on the National or State Registers of historic Places or designated as a local landmark. An owner of a historic property may grant an easement on just the exterior of a building, in which case it is often called a facade easement, or the owner may elect to have the easement cover the interior as well. conservation easements may also be given on open land surrounding a historic site or structure to ensure that this land is not inappropriately developed.
All preservation easements are granted in such a way that the "run with the land" and are passed on to all future owners of a property. An easement does not prevent an owner from selling the property nor does it require that it be open to the public.
What Are the Benefits of Historic Preservation Easements to the Owner?
An owner may well ask, "What's in it for me?" In addition to the satisfaction derived from knowing that your historic property will always be preserved, the owner may also received a tax deduction. According to Section 170 of the Internal Revenue code, the donation of a preservation easement on a property listed in the National Register of Historic Places can qualify as a charitable deduction for Federal Income, estate and gift tax purposes. The amount of that deduction is equal to the reduction in the property's fair market value as a result of the easement. Although valuation and the resulting tax savings can become very complex to determine, property owners may save substantially on their taxes. Regardless of how important the potential tax savings might be to a potential easement donor, it is always best to consult a tax attorney or accountant whenever considering the donation of a preservation easement.