with Potential Tax Benefi ts

National Park Service

Technical Preservation Services 2010
2 3

A historic preservation easement is a voluntary legal 

agreement, typically in the form of a deed, which permanently protects a signifi cant historic property. Since 

it is a perpetual easement, an owner is assured that the 

property’s historic character will be preserved. In addition, an owner who donates an historic preservation 

easement may be eligible for one or more forms of tax 

benefi ts. 

Under the terms of a typical preservation easement, a 

property owner places restrictions on the development 

of, or changes to, the property and transfers these 

restrictions to a qualifi ed organization whose mission 

includes environmental protection, land conservation, 

open space preservation, or historic preservation. The 

organization must have the resources to manage and 

enforce the restrictions provided for in the easement 

and have a commitment to do so. Once recorded, 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. Preservation easements 

in some states may also be called preservation “restrictions,” “covenants,” or “equitable servitudes.” 

Benefi ts of Donating 

An Easement

An easement is a particularly useful and fl exible historic 

preservation tool. It allows a property owner to retain 

private ownership of the property while insuring that 

the historic character of the property will be preserved. 

Within certain statutory and regulatory constraints, 

easements can be tailored to meet the needs of the 

property owner, the individual resource, and the mission 

of the protecting organization. 

If certain criteria are met, the owner may be eligible 

for a Federal income tax deduction for the value of 

the easement, and Federal estate taxes also may be reduced. In addition, many State tax codes provide state 

tax benefi ts for conservation easement contributions 

where a reduction in the value of a property occurs. 

There may also be local tax benefi ts 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 benefi ts of an easement 

A comprehensive conservation and preservation easement protects the 

Cambus-Kenneth Farm in Danville, KY. © National Trust for Historic 

Preservation.

donation should consult with their accountant or tax 

attorney.

Easement Restrictions

A conservation easement gives the organization to 

which it is conveyed the legal authority and responsibility to enforce its terms. This includes the right to inspect 

the property to ensure that the owner is complying with 

the terms of the easement. Historic preservation easements typically prohibit an owner from demolishing the 

historic building(s) and from making changes that are 

inconsistent with the historic character of the property. Proposed alterations to the property may require 

prior approval from the easement holding organization. Restrictions on subdividing and developing the 

property are common as well. To be tax deductible, a 

preservation easement generally cannot be amended. If 

the restrictions apply only to the exterior of a building, 

future alterations to the interior do not require approval 

by the easement-holding organization, as long as the 

alterations do not affect the building’s exterior appearance or structural integrity. 

Potential Tax Benefi ts

When an owner donates an easement in accordance 

with Federal and State rules to a qualifi ed charitable or 

governmental organization, the easement may provide 

tax benefi ts. The value attributed to the easement may 

be claimed as a charitable contribution deduction from 

Federal income tax. The value of the easement is generally the difference between the appraised fair market 
4 5

The modern-style residence of noted residential architect Henry B. Hoover in Lincoln, MA 

remains in the family while being permanently 

protected by an easement that includes certain 

interior rooms. Courtesy of Historic New 

England.

If the easement has value, the amount will depend on 

a number of factors, such as how the easement affects 

the property’s development potential, which may be 

determined by the extent to which local government 

restrictions already restrict changes to the property. 

Where there is no further development potential for the 

property or the building is already under local regulations subject to the same conditions as those in the 

easement (including, for example, binding review by 

a local historic district commission to insure that the 

property’s historic character is preserved), the easement 

may be of little or no value. On the other hand, for a 

property located in an area where there are few regulations governing changes to the exterior of historic buildings, the easement may result in signifi cant protection 

for the property’s historic character, possibly generating 

tax benefi ts to the donor.

Recent Federal Tax 

Law Changes

A property owner seeking a Federal tax deduction for a 

qualifi ed conservation contribution (including a donation of an historic preservation easement) needs to be 

aware that there are several detailed requirements to 

meet, and that there are a number of recent changes to 

the tax laws. Several of these changes govern properties located in registered historic districts. For example, 

to be deductible, the deed of easement on a building 

in a registered historic district must now preserve the 

entire exterior of the building (including the front, sides, 

rear and height of the building), and the easement 

must prohibit any change to the exterior of the building 

inconsistent with its historic character. 

The requirement that the easement cover the entire 

building exterior does not apply to an easement on a 

property that qualifi es for the deduction on the basis 

that it is individually listed in the National Register of 

Historic Places. As in the past, easements on properties 

individually listed in the National Register of Historic 

Places can cover part(s) of a building, such as the front 

façade, a front façade along with an important interior 

space, or the entire exterior. Most easement-holding 

organizations, however, require that the entire exterior 

of a building be covered by the easement’s protections.

code temporarily expanded the availability of the tax 

deduction in certain respects. These temporary changes, 

however, expired on January 1, 2010. Currently, the 

amount of a charitable income tax deduction for a 

conservation easement contribution that can be used by 

an individual in any one year is back to 30 per cent of 

the donor’s contribution base (generally adjusted gross 

income) from the temporary increase of 50 per cent. 

In addition, the period over which individuals can carry 

forward unused deductions for conservation easement 

contributions returns to fi ve years from the temporary 

increase of fi fteen years. Any changes after January 1, 

2010 can be viewed on the National Park Service web 

site. 

Qualifi ed Properties

According to the Internal Revenue Code, an income tax 

deduction may be available for a preservation easement 

protecting a certifi ed historic structure or a historically 

important land area. 

A property is considered a certifi ed 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 certifi ed 

by the National Park Service as contributing to the 
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Completed in 1816, Tudor Place in Georgetown, DC, a National Historic 

Landmark, is protected by an easement covering the building and 

grounds granted to the U.S. Department of Interior by a direct family 

descendant of the original owner, the late Armistead Peter 3rd. 

Photo: Charles Fisher, NPS.

historic signifi cance 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 certifi ed by the 

National Park Service. 

In the case of a building in a registered historic district, 

to apply for a certifi cation of signifi cance (a determination by the National Park Service as to whether a 

building is a certifi ed historic structure), a prospective 

easement donor contacts the State Historic Preservation Offi ce (SHPO) to request a Historic Preservation 

Certifi cation Application or downloads the application 

from the National Park Service website www.nps.gov/

history/hps/tps. 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 certifi cation decision. The property must be 

certifi ed by the National Park Service either by the time 

of the transfer of the easement or the due date (including extensions) for fi ling the Federal income tax return 

for the taxable year of the easement transfer.

Properties individually listed in the National Register 

of Historic Places are already recognized as certifi ed 

historic structures, so a property owner does not need 

to request a certifi cation from the National Park Service. 

Unlike the deduction for preservation of properties 

located in an 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 al

A historically important land area must be listed in the 

National Register of Historic Places. Historically important land areas include either independently signifi cant 

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, 

archeological sites, battlefi elds, and historic cultural and 

designed landscapes.

Public Benefi t

In order to claim the Federal income tax deduction for 

a historic preservation easement, at least some visual 

public access to the property must be available. The degree of access is tailored to the historic resource under 

protection. For example, the amount of access required 

for a sensitive archeological site individually listed in the 

National Register may be as little as a few hours a year. 

Other means of providing access may include ensuring 

visual access from a public roadway for a historic building and grounds subject to an easement, or allowing 

the public to tour the inside of a historic house on a 

reasonable number of days a year if the easement is 

imposed on portions or all of the interior. Often the 

easement-holding organization can assist the owner in 

fi nding a balance between protecting the property and 

the owner’s privacy, and providing a public benefi t.

Qualifi ed Organizations

The recipient of an easement donation must be a qualifi ed organization. Qualifi ed organizations may include 

governmental units, charities that receive a substantial 

part of their support from governmental units or from 

public contributions, publicly supported charities, or 

charities that meet the requirements of §509(a)(3) 

and are controlled by qualifi ed organizations. For an 

easement on a historic property in a registered historic 

district, the donor and donee must enter into a written agreement certifying that the donee is a qualifi ed 
8 9

The 1787 Phelps Inn located in North Colebrook, CT is one of several 

buildings on a 33-acre property protected by a preservation and conservation agreement granted to Historic New England by the late John A. 

and Nancy Phelps Blum. Courtesy of Historic New England. 

resources to manage and enforce the restriction and a 

commitment to do so. 

An easement-holding organization may require the 

easement donor to make an additional donation of 

funds to help the organization administer the easement. 

Those funds are often held in an endowment that generates an annual income to pay for easement administration costs such as staff time for annual inspections or 

needed legal services. 

Inconsistent Use

To qualify for a deduction, the donor may not retain 

uses of the property that would permit destruction of 

signifi cant conservation interests. Retained uses must 

be specifi cally circumscribed in the deed of easement.

Valuation/Qualifi ed Appraisal

Easement valuations have come under closer scrutiny by 

Congress and the IRS in recent years, and the Federal 

tax code imposes new qualifi cation standards for both 

appraisals and appraisers. For example, the appraisal 

must be prepared in accordance with generally accepted appraisal standards.

the contribution. The most commonly-used method 

of determining this value is usually referred to as the 

“before” and “after” method: Generally the fair 

market value of an easement is equal to the difference 

between the fair market value of the property before 

the granting of the easement and the fair market value 

of the property after the granting of the easement. The 

appraisal therefore must value the property both before 

and after the easement is granted.

Treasury Regulations governing valuation of conservation easements (§ 1.170A-14(h)(3)(ii)) provide that, 

if the before and after valuation method is used, the 

market value of the property before the contribution 

must take into account not only the property’s current 

use but also an objective assessment of the likelihood 

that the property would be developed absent the 

restrictions, as well as any effect from local zoning, local 

historic preservation regulations, and similar restrictions 

that affect the property’s highest and best use. In other 

words, the valuation of an easement must be determined through a qualifi ed appraisal that considers the 

specifi c terms of the easement and the specifi c nature 

of restrictions imposed by existing local land use or 

similar laws. Note that there are no generally recognized percentages by which an easement reduces the 

value of a property. In fact, there are instances in which 

the grant of an easement may have no material effect 

on the value of the property, particularly if the easement 

is no more restrictive than local ordinances already in 

effect.

In the case of a preservation easement donation for 

which a deduction of more than $5,000 is claimed, a 

donor generally must obtain a qualifi ed appraisal prepared by a qualifi ed appraiser. The appraisal must be 

attached to the donor’s tax return for any claimed deduction over $500,000. To deduct the value of an easement on a building in a registered historic district, an 

appraisal must be attached to the tax return regardless 

of the amount of the claimed deduction. The Internal 

Revenue Service (IRS) may accept the value determination in the appraisal or make its own determination. 

Donors and appraisers should be aware that there are 

strict penalties for overvaluations of property that lead 

to substantial or gross valuation misstatements.

 

In the case of a claimed deduction of $250 or more, 

the donor must obtain a contemporaneous written acknowledgement as required by section 170(f)(8) of the 
10 11

One of a number of historic commercial properties in a historic 

district renovated by the Ron Kaufman Co., the 1855 Gibb-Sanborn 

Warehouse, a rare city survivor of the Gold Rush era, is protected by 

an easement held by San Francisco Architectural Heritage. Photo: ©SF 

Architectural Heritage.

and a description of any property it received (such as 

the preservation easement). The organization must also 

state whether it provided any goods or services in return 

for the property and, if so, a description of the goods 

or services. The donor must obtain this contemporaneous written acknowledgement on or before the earlier 

of the date the donor fi les the tax return claiming the 

charitable contribution or the due date (including extensions) for the tax return.

For easement donations that involve buildings within 

historic districts where a deduction in excess of $10,000 

is being claimed, the donor must submit a $500 fi ling 

fee with IRS Form 8283-V. In addition, in all cases in 

which a deduction of more than $500 is claimed, a 

properly completed IRS Form 8283 (Noncash Charitable 

Contributions) must accompany the donor’s tax return. 

For contributions for which a deduction of more than 

$5,000 is claimed, the Form 8283 generally must be 

signed by the appraiser who prepared the qualifi ed appraisal and by the qualifi ed organization that accepted 

the easement donation. 

In addition to the above requirements, the donor of 

a preservation easement on a building in a registered 

historic district must include with his or her tax return 

photographs of the entire exterior of the building and a 

description of all restrictions on the development of the 

building. 

verifi able education and experience in valuing historic 

properties, must not be prohibited from practicing before the IRS, and must meet several other requirements 

established by the IRS. In addition, certain appraiser 

declarations are required.

Combining an Easement with 

Federal Historic Rehabilitation 

Tax Credits

A property owner conveying an easement on an historic 

building that has or will be rehabilitated may also be 

eligible for a 20% tax credit under the Federal Historic 

Rehabilitation Tax Incentives Program. This credit is 

available for properties rehabilitated for income-producing properties, but it is not available for properties 

used exclusively as the owner’s private residence. The 

rehabilitation must be substantial as defi ned by IRS and 

applies only to a project that the National Park Service 

designates as a certifi ed rehabilitation.

In cases where the donor may qualify for both a Federal 

income tax deduction and a rehabilitation tax credit, 

there are two important considerations: First, an easement placed on a building that is the source of a rehabilitation tax credit may be considered a partial disposition of the building, which could affect the available tax 

credits. Second, where rehabilitation tax credits have 

been claimed within 5 years preceding the easement 

donation, the Internal Revenue Code requires some 

reduction in the amount of the easement contribution 

deduction. An accountant or tax attorney should be 

consulted in such cases. 

Further Information

For further information about historic preservation easements and how to obtain certifi ed historic structure status for a building in a historic district, visit the National 

Park Service website at http://www.nps.gov/history/hps/

tps/tax/easement.htm or contact our offi ce at NPS_HPSinfo@nps.gov. 

This leafl et incorporates changes to Federal tax law as 

a result of the Pension Protection Act of 2006 and the 

Food, Conservation, and Energy Act of 2008 (Public 
12

The preservation 

easement given to the 

Preservation Alliance 

for Greater Philadelphia 

on the Manufacturer’s 

Club protects a National 

Register listed property 

not subject to local 

historic commission 

review. Courtesy of the 

Preservation Alliance.

Law 110-234). For updates on any subsequent Federal 

tax law changes, please refer to the website cited on 

the previous page. 

Acknowledgments

This brochure was prepared by Charles Fisher, National 

Park Service. The following individuals are gratefully 

acknowledged for their review and other assistance in 

the preparation of this publication: Paul W. Edmondson, Vice President & General Counsel, National Trust 

for Historic Preservation, Washington, DC, and Stefan 

Nagel, Esq., of Counsel, Law Offi ce of Stephen J. Small, 

Esq., P.C., Newton, MA. Thanks also go to the Washington Offi ce of the Internal Revenue Service; Michael 

Auer and Kaaren Staveteig of the National Park Service; 

and Joseph Cornish, Historic New England, for their 

assistance. 

This publication was prepared pursuant to the National 

Historic Preservation Act, which directs the Secretary of 

the Interior to develop and make available to government agencies and individuals information concerning 

professional methods and techniques for the preservation of historic properties.

Comments or questions regarding this publication 

are welcomed and should be addressed to Technical 

Preservation Services, Heritage Preservation Services, 

1201 Eye Street NW, Washington, DC 20005 or email at 

NPS_HPS-info@nps.gov.

 

 cover: Tudor Place, Georgetown, DC