Select a Question
- What is the Federal Historic Preservation Tax Incentive Program?
- How can I determine if a property is eligible?
- What is a façade conservation easement?
- What are the tax advantages of donating an easement?
- What is the value of a façade conservation easement and how is it set?
- Is there a cash outlay associated with making an easement donation?
- How long does an easement last?
- What restrictions are imposed on the property owner?
- 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 make a donation?
What is the Federal Historic Preservation Tax Incentive Program?
The Historic Preservation Tax Incentive Program, a federal program created by Congress, allows owners of historic properties to donate a façade conservation easement on the exterior of their property to a qualified historic trust and claim a charitable contribution deduction.
How can I determine if a property is eligible?
To be eligible, the property must be either located in a Historic District that is listed in the National Register of Historic Places or 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).
What is a façade conservation easement?
A façade conservation easement is a voluntary legal agreement made between a property owner and a non-profit organization to protect a significant historic building. By granting an easement, the owner promises not to change the outside appearance of the property without the Trust’s permission.
What are the tax advantages of donating an easement?
The donation of a façade conservation easement is recognized as a charitable contribution under the tax code. The value of the easement, and therefore the charitable contribution deduction, is based on a qualified, independent appraisal. This amount is deducted from the owner's federal income taxes in the same manner as other charitable contributions. The deduction applies to local income taxes in Washington, DC and state income taxes in Maryland as with any other charitable contribution.
What is the value of a façade conservation easement and how is it set?
The value of the easement is set by a qualified, independent appraiser as a percentage of the appraised fair market value of the entire property. U.S. Tax Court cases state that the easement value must be based on the facts of a particular appraisal situation not on a predetermined formula. However, in all the applicable Court decisions the judges determined the easement value to be ten percent or more.
Is there a cash outlay associated with making an easement donation?
The cash outlay includes appraisal fees, bank service charges and a cash contribution to the Trust for monitoring the property in perpetuity, all of which are tax deductible along with the easement deduction.
How long does an easement last?
The main purpose of a façade conservation easement is to forever guarantee the protection of the property's architectural integrity. As a result, the tax code requires that the easement be granted in perpetuity.
What restrictions are imposed on the property owner?
The basic restrictions relate to the architectural integrity of the façade. They require that the property owner receive the consent of the Trust before any exterior modifications are made that will change the appearance of the façade.
What criteria does the Trust use when reviewing a proposed change?
In general, a proposed change is acceptable if it is consistent with the property's original architectural style.
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 two weeks to all such requests. In the circumstance where the changes are large scale and more time is needed for 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 Capitol Historic Trust easement does not grant public access to the property. The owners "gift to the street" protects the visible exterior of the historically significant property.
What must I do before beginning maintenance projects on my property?
Rehabilitation and maintenance work requires the prior approval of the Trust only when it would change the 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 make a donation?
Call our Trust representative Tim Maywalt, at 202-248-6575 or send an e-mail to TMaywalt@capitoltrust.org and he will assist you in completing your application.