One of the most effective–but often overlooked–tools for preserving historic property is a preservation easement. A preservation easement is a legal document which regulates the use of or changes to real property and may be given or sold by a property owner to a charitable organization. Once recorded, an easement becomes part of the property’s chain of title and ‘runs with the land’ in perpetuity. As such, it binds not only the present owner who conveys it, but all future owners as well.
Historic Savannah Foundation (HSF) is a Qualified Organization under the Georgia Conservation Tax Credit Program and has managed its easement program for several decades. For property owners seeking an additional layer of protection above and beyond that which is prescribed by Savannah’s Historic District Board of Reveiw (HDBR), easements are instruments worth exploring. HSF holds, monitors and enforces easements and, as a private non-profit organization, is not subject to the political whims of City Council or HDBR. Historic properties throughout Savannah and Chatham County are eligible; this program is not limited to properties within the National Historic Landmark District. For a searchable document of properties on which HSF holds either an easement or a protective covenant click the link at the top of the page titled Easements and Protective Covenants held by HSF.
For more information on easements, contact HSF at 912-233-7787. For an article on Easements by Daniel Carey published in Forum News, click here.
What are the benefits of donating an easement?
Donating an easement protects a significant property even after an owner has sold or bequeathed it. If the property is already located in a local historic district, the easement provides additional and more stringent protections. Easement donations provide income, gift and estate tax advantages for the donor. Most importantly, it protects historic properties for future generations.
How does an easement protect property?
Easement properties are documented and inspected annually by the HSF staff. The easement holder has the right to review, consult and approve (or disapprove) proposed alterations to a structure or its setting and to enforce the terms of the easement in the event of a violation.
How is an easement valued?
Valuation, made by a professional appraiser, is typically the difference between the fair market value of the property before and after the grant of easement. An easement may reduce the market value of a property because it restricts development rights.
How does a property qualify for an easement deduction under federal tax law?
Certified historic structures are eligible; most often they are listed on the National Register of Historic Places or are ‘contributing’ to a National Register or local historic district.
What are the possible tax consequences of an easement donation?
For federal income tax purposes, the most important benefit is that the value of the donated easement may be deducted as a charitable contribution (thereby reducing the donor’s taxable income). The donor receives a one-time charitable deduction on federal income tax for the potential reduced value of the property. In addition to the income tax deduction, federal estate taxes may also be reduced if the fair market value of a property is reduced by a preservation easement.
For state income tax purposes, the Georgia Conservation Tax Credit Program allows a tax credit equal to the value of the easement donation; capped at 25% of the fair market value of the donated property (not to exceed $250,000 for individuals and $500,000 for corporations). An easement may also decrease a property’s local tax assessment and thus its local property taxes.
Easement & Protective Covenant Holders
If you are the owner of a property where an easement or protective covenant is held by HSF, here are a few things you should know:
- An easement or protective covenant covers ALL exterior sides of a property, not just the front or primary facade.
- HSF is required by the GA Department of Natural Resources to regularly survey all properties that we hold easements and protective covenants on. Per our obligation, we must monitor and evaluate the exterior condition of each building.
- Before undertaking any work to the exterior of your property, a request for alterations must be submitted to and approved by HSF. This is separate and/or in addition to a request for a Certificate of Appropriateness from the Metropolitan Planning Commission. A form to request alterations can be found here: Request for Alterations to Easement & Covenant Properties. Routine maintenance, i.e. work that will not result in any change of appearance to the exterior of the property does not require HSF’s consent.
- All work performed on a property on which HSF holds an easement or covenant must be carried out to the Secretary of the Interior’s Standards for Rehabilitation. For more information please click here or contact our office for a copy of those Standards. As well, we recommend that you (or your contactor) read the applicable Preservation Briefs, also provided by the National Park Service, click here.
NOTE: The complexities of the federal tax code and applicable IRS regulations are not easily encapsulated in a short summary, so prospective donors are strongly advised to seek the advice and assistance of an attorney with experience in such matters.