What are the benefits of granting an easement?
There are many benefits associated with granting an easement. The first is the peace of mind knowing that the property will be protected from development or alteration in perpetuity, regardless of who owns it. The second benefit is financial. Because the owner is giving up certain rights to the property, the owner is potentially eligible for certain local, state and federal tax incentives. A qualified easement may provide the following potential tax incentives:
1. The value of an easement can be a charitable contribution to the individual’s personal financial situation. Preservation easements are regulated by the IRS Code, Section 170 (h). If the provisions of the easement meet the requirements of the code, the donation value is deductible from federal income taxes in the same manner as other non-cash charitable contributions. A taxpayer may deduct as a charitable donation, i.e., the difference in value between the property before an easement is granted (unrestricted value) and after it is donated (restricted value). Under the Alternative Minimum Tax provisions of the Tax Reform Act of 1986, there is a strong possibility that a deduction could be limited to an owner’s “basis” (acquisition cost) in the property rather than the fair market value of the easement. Only a careful review with personal tax advisors will reveal whether or not this will be a problem for individual property owners. It is the property owner’s duty to ensure that the donation is made in accordance with the Internal Revenue Code in order to receive this deduction
2. The value of the easement may also reduce the assessed value of the property for property tax purposes. Tax assessments are made by local assessors based on the fair market value of the property. Logically, a restrictive easement that reduces the property’s market value should be reflected in a lower assessment, but this decision falls within the discretion of the local assessor
3. The easement may reduce the value of the owner’s estate for estate tax purposes.

For more information, please call Historic Preservation at 301-952-3520.

Show All Answers

1. What is a preservation easement?
2. Who is required to grant an easement to the M-NCPPC?
3. What are M-NCPPC’s responsibilities?
4. How long does an easement last?
5. Why grant a preservation easement ?
6. What are the benefits to the general public in the award of historic property grants to individual owners?
7. How does an easement work?
8. What changes are allowed to my historic property?
9. Does the preservation easement take precedence over the county preservation ordinance?
10. Are we talking about the entire house and property?
11. Will the easement cover interior features as well as the exterior of the property?
12. How is the easement applicable if I use the grant award to purchase a historic property?
13. What is the financial value of the easement and how is it determined?
14. What document does a pro perty owner file to obtain the federal tax benefit?
15. What are my out-of-pocket costs in donating an easement?
16. What are the legal and real estate implications?
17. Are easements a well-proven idea?
18. What are the benefits of granting an easement?
19. Do typical non-cash charitable contributions rules apply to the donation of a preservation easement?
20. Must an easement require some type of public access?
21. What are the basic tax code requirements for an easement?