What Is A Conservation Easement?
An easement is a partial interest or limited right in the use of a property which an owner legally grants to another person or organization. Granting a neighbor access or right-of-way across one′s land by means of a road or driveway is probably the most familiar type of easement.
Conservation easements protect buildings and associated land areas from demolition or alteration which would damage their historic and architectural integrity. Owners can secure the preservation of their properties by donating a conservation easement to the Florida Trust, which then acts as a steward of these rights.
The Florida Trust exercises its stewardship by ensuring the preservation of significant elements of the exterior, and at times, the interior of a building. An owner retains title and can sell, will, or live on the property. Alterations are permitted; however, they must meet preservation standards and be reviewed by the Florida Trust prior to initiation of work as per the easement agreement.
Does the Florida Trust Hold Easements?
Yes, the Florida Trust holds easements on the following properties:
What Properties Qualify?
Properties which are listed in the National Register of Historic Places either individually or as part of a historic district and certified as being of significance to that district, are eligible. Contributing buildings within state or local historic districts and certified by the Secretary of the Interior as being significant are eligible, also. The Florida Trust accepts easements on properties located in Florida.
Why Donate An Easement?
Conservation easements are given to the Florida Trust to protect properties from changes which would damage their significance. This protection preserves the property for all Floridians.
What Restrictions Are Imposed On The Property?
The basic restrictions of the deed relate to the modifications of the building or land area. Modifications can be made and uses can change. The Secretary of the Interior′s Standards for Rehabilitation guide the type of changes which are appropriate. The property must be maintained in a good and sound state of repair, natural wear and tear excepted. Copies of a standard easement document are available upon request.
How Long Does An Easement Last?
The purpose of a conservation easement is to provide for the protection of the building or land area in perpetuity. These easements can enable an owner to be eligible for tax benefits. The Florida Trust can hold easements for governmental entities which have specified time limits as no tax benefits accrue. The easement is recorded with the property deed and ″runs with the land,″ affecting the owner who grants the easement and all future owners of the property.
A conservation easement is superseded by eminent domain; however, the public entity must make every reasonable effort to avoid impacts to an easement property.
Is An Easement Property Open To The Public?
To ensure that the federal tax deduction available for conservation easements provides a benefit to the general public, the IRS requires that any property with a conservation easement where federal tax deduction is accepted will have limited public access. The property remains in private ownership and the fulfillment of public access requirements can be overseen by the property owner as long as it meets the IRS requirements.
In cases where the conservation easement applies only to the exterior of the property, this public access may be met by allowing the general public to view the property from the public right-of-way. In cases where the exterior of the property is not visible by public areas, the property owner will need to take steps to ensure that the public access requirements are met. These requirements vary based on certain factors such as the accessibility of the property and its significance.
Property owners with limited access to their properties should consult with their tax attorneys to determine how this public benefit can be met. Some possible examples are scheduling public open houses, participating in historic home tours, or providing some other form of historic viewing. Public access to the interior is not required as long as interior features are not protected by the easement.
If interior features are protected under the terms of the easement, the property owner must provide a public viewing opportunity to see those features. Again, this can be fulfilled by participation in house tours or open houses. Public access can be restricted to specific areas of the property to ensure safety and security.
Can An Easement Be Donated On A Property Before Major Rehabilitation?
The Florida Trust may accept an easement donation prior to a building′s rehabilitation. During the application process, the donor must furnish plans and drawings indicating how the building′s exterior will be treated. Once these documents have been reviewed, the Florida Trust will determine whether or not to accept the easement. If accepted, a stipulation obligating the owner to complete the approved plans will be included in the easement document.
What Are The Tax Benefits Of A Conservation Easement?
Section 170(f) of the Internal Revenue Code establishes federal income and estate tax deductions for conservation easement contributions to qualified organizations.
The donation of a conservation easement reduced future development potential and, therefore, typically lowers a property′s value. A conservation easement donation to the Florida trust can qualify as a charitable contribution, deductible for federal, estate, and gift tax purposes under the Tax Reform Act of 1976. If the value of a donation exceeds the donor′s deductible limit, the balance may be carried forward for up to five additional years.
The deduction takes place in the tax year in which the easement is formally accepted by the Florida Trust which may or may not be the same year in which the easement is offered.
How Is The Value Of The Easement Determined?
In general, the value of an easement is equal to the reduction in the property′s fair market value attributable to the easement (fair market value before the donation, minus the fair market value following the easement donation). A qualified appraiser (meeting the qualifications specified by the IRS) must be retained to determine this value for tax purposes. Many factors are taken into consideration when determining the value of an easement. For example, the IRS may reduce the deductible amount allowable if a property is already regulated by strong local preservation regulations or if the Federal Rehabilitation Tax Credit was used for the restoration of the property. For specific information, see the Pension Protection Act of 2006; Public Law 109-280 August 17, 2006.