An historic preservation easement is a legal agreement made between a property owner and a qualified charitable or governmental organization to protect an historic property in perpetuity. Under the easement terms, a property owner is obliged to seek prior approval from the charitable or governmental organization before undertaking any changes to the exterior of the property. The charitable or governmental organization will not approve changes that are not consistent with the historic character of the property. This obligation becomes part of the real property record and binds future owners as well.
The National Historic Preservation Act of 1966 (Public Law 89-665) established legal guidelines for identifying and protecting important cultural resources. Under the law, the Secretary of the Interior, through the National Park Service, was authorized to create a list of those historic places and properties worthy of preservation. This list, â€śThe National Register of Historic Places,â€ť identifies â€śsites, buildings, objects, districts and structures significant in American history, architecture, archaeology and culture.â€ť
The 1966 Act was a major advance in the Federal governmentâ€™s role in historic preservation. However, after ten years of experience with the legislation, Congressâ€™ main concern was that this legislation was not being effective in protecting the nationâ€™s cultural resources. Congress had relied primarily on local and state governments, citizens groups and local zoning ordinances to protect the nationâ€™s cultural heritage. The creation of the National Register of Historic Places through the Department of the Interior did not give the federal government control over historic structures. The control remained exclusively with the state and municipal governments. Thus, if allowed by the state or the municipal government, any building in any historic district could be legally destroyed.
In 1976, Congress passed the Tax Reform Act of 1976 (Public Law 94-455). This legislation attempted to strengthen the countryâ€™s historic preservation efforts by providing federal tax incentives for the preservation and rehabilitation of properties certified as historically significant. These tax incentives are the legislative basis for the Historic Preservation Tax Incentive Program.
Congress created the Historic Preservation Tax Incentive Program to encourage property owners living in federal historic districts to participate directly in the historic preservation process. It hoped that this program might act as a form of insurance, protecting these historic cultural resources when economic and political pressures on local governments became too great. To accomplish this goal, Congress offered owners of historic properties located in federal historic districts a significant reduction in their federal income tax (and in many cases, a reduction in their state and local taxes as well) if the property owner would agree to preserve the historic nature of the propertyâ€™s exterior.
In 1986, the Department of the Treasury issued final regulations further governing the rules allowing easement donations as charitable deductions (Treasury Regulations Section 1.170A-14).