PRESERVATION EASEMENTS

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, thus binding not only the present owner who conveys it but all future owners as well.

A preservation easement gives Historic Savannah Foundation the legal authority to enforce its terms. These terms create covenants prohibiting the owner from making alterations to the property without prior review, consultation and approval by the Historic Savannah Foundation. The easement also imposes positive covenants that require the owner to maintain it in a certain physical condition.

What are the benefits of donating an easement?

Donating an easement protects a significant property even after an owner has sold or bequeathed it; provides income, gift, and estate tax advantages for the donor and in some states, property tax advantages; and enables preservation organizations and public agencies to protect properties against adverse changes through acquisition of a partial interest rather than assumption of the full burden of property ownership.

How does and easement protect property?

The easement holder has the right to review and approve proposed alterations to a structure or its setting and to enforce the easement terms 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?

The Tax Treatment Extension Act of 1980, implemented by federal regulations issued on January 14, 1986, made permanent the federal income, gift, and estate tax deductions for charitable contributions of partial interests, such as easements, in real property. Restrictions must be granted in perpetuity. Gifts of "qualified real property interests" must be made to a "qualified organization" and be "exclusively for conservation purposes," which include preservation of a "historically important" land structure. A "certified historic structure" is a building, structure, or land area, depreciable or nondepreciable, listed in the National Register of Historic Places or located in a registered historic district and certified as being of significance to the district.

What are the tax consequences of an easement donation?

For federal income tax purposes, the most important benefit is that the value of the donated easement is deductible as a charitable contribution, generally not to exceed 30 percent of the taxpayer's adjusted gross income, thereby reducing the donor's taxable income; the value in excess of 30 percent may be carried over for five succeeding tax years. In some cases the ceiling on deductibility can be increased to 50 percent of adjusted income, with a five year carry-over. For federal estate tax purposes, the value of the estate will be reduced because of the easement's development limitations. For state income and estate taxes, state laws may authorize deductions similar to the federal provisions. An easement also may decrease a property's local tax assessment and thus its local property taxes.

Steps to completing and easement

Step 1:

Contact Historic Savannah Foundation to determine if your property is eligible for an easement donation. If HSF determines that the building is listed on the National Register of Historic Places and HSF states its interests in holding an easement, proceed to Step 2.

Step 2:

Have the property appraised for tax purposes by a professional real estate appraiser.

Step 3:

Contact Historic Savannah Foundation to have a deed of Historic Preservation Easement drawn up.

Provide Historic Savannah Foundation with a copy of the legal description of your property.

Provide Historic Savannah Foundation a copy of the appraisal.

Step 4:

Forward the following to HSF:

• Original Executed Deed
• Current Appraisal
• Administrative Fee
• Copy of Exhibit A Legal Description

Historic Savannah Foundation will have the deed recorded at the Courthouse; original of the document will remain with HSF.

Requesting Permission for Exterior Alterations/ and or Maintenance

1. Before undertaking any work to the exterior of a building where there is a historic preservation easement held by Historic Savannah Foundation, the owner should determine if the work is going to result in any change of appearance in the exterior of the house.
2. If the answer to this question is no, then the work is considered routine maintenance and under paragraph 1(b) of the easement document, no consent of Historic Savannah Foundation is necessary.
3. If the answer to this question is yes it will result in a change to the appearance of the building, then the owner needs to contact Historic Savannah Foundation at 233-7787 to submit a request. If the request is for an addition or a change in architectural fabric, then a drawing of the proposed change will need to be submitted to Historic Savannah Foundation.
4. Ordinarily, Historic Savannah Foundation will promptly answer the request by either approving, denying or making comments on the request. In the case of a denial or comments being made, Historic Savannah Foundation will work with the owner to find a design solution to the satisfaction of the owner and the Foundation.
5. Once an application is filed with Historic Savannah Foundation, the Foundation has 60 days to give its written approval, rejection or other comments. If the Foundation fails to answer within the 60 day period, the owner shall have the authority to proceed with the work.

Administration Fee

A one-time administrative fee of two percent of the value of the tax deduction generated by the donation of the easement is charged by the Foundation at the time of the donation.  For example, an easement which is valued as a $10,000.00 tax deduction will create an administrative fee of $200.00 For income-producing properties, this fee can be considered a business expense.

This fee will cover the cost of review and acceptance of easement documents, and the periodic and annual review of easement properties and requested changes to structures.