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A facade easement is a type of conservation easement which is designed to maintain the historic character of a building's facade. When a facade easement is created, the owner of a building agrees not to make changes to the facade without confirming that they will not compromise the historic value. The easement is donated to a nonprofit organization which accepts conservation easements and holds them in trust. Numerous cities have organizations which handle historic conservation easements.
For the building owner, the advantage of a facade easement is that it entitles the owner of the building to a tax break. The easement restricts development of the property's facade, and government agencies recognize that this can bring the value of the property down. Hence, people are allowed to use the easement as a tax deduction to reduce their property tax, treating the easement as a charitable contribution.
In several nations, the use of facade easements as tax deductions has veered into the realm of abuse. For this reason, some governments have set out specific rules about how historic conservation easements work, with the goal of reducing abuses. People with such easements are also subject to audits to verify the claims made in the easement agreement, including audits to check to see that the facade is being left in historic condition, with no changes which might violate the terms of the easement.
In order to qualify for a facade easement, a structure needs to be of historic value. However, if the home is in a historic district with development restrictions, it cannot receive an easement. This is because whether or not homes in the district have easements, their facades must be left intact to comply with the development restrictions. Thus, the owner of a property does not need to put it in trust with an easement to protect its historic character, and a facade easement would not devalue the structure at resale because development in the entire neighborhood is restricted.
Laws about conservation easements vary from nation to nation, and it is advisable to consult a lawyer to get specific advice. As a general rule, if the intent behind an easement is a genuine desire to protect a structure's historic character and value and such protections are not in place in the area where the structure is located, the easement is probably legal. Filing for an easement with the goal of reducing tax liability, however, can ensnare people in problems. It is also wise to work with a well established and trusted organization which accepts conservation easements, ideally an organization which works in the community, rather than one located somewhere else.
The text above indicates that the donation of a facade easement can result in a tax reduction with reference to the property tax. This reduction in property tax based on a reduction in the market value for a historic building is a question for the government agency that does the assessment of property values.
From my understanding, the donation of a facade easement, or if one has lots of land and one donates a conservation or preservation easement to protect the land, then the typical tax consequence motivation for making such an easement donation is for the charitable donation value of that easement. The charitable donation value is then used in one's income tax statements by one's accountant in determining
the reduction of income tax that one needs to pay.
An appraiser, hired by the person making the easement donation, would have to do an appraisal of the market values before and after the easement donation with the difference in those before and after values being the charitable donation amount. An appraiser with skills and experience in doing conservation and/or preservation easements would need to be retained. The accountant or tax lawyer who does the income tax filings also needs to be skilled and experienced in dealing with charitable donations resulting from easement donations.
For references and further information, one could contact The Land Trust Alliance (the non-profit land trust coordinating group based in Washington, DC) for information on conservation easements. For preservation easements, the main national group historic preservation group is the The National Trust for Historic Preservation, a non-profit also based in Washington, DC. Another historic preservation entity is the National Conference of State Historic Preservation Officers, also based in Washington, D.C. NCSHPO can provide the contact information for the relevant State Historic Preservation Office in the state in which the subject property is found (NCSHPO includes all the 50 US states, the American Indian tribal nations that have Tribal Historic Preservation Officers and the US territories). There are various appraisal industry groups and the American Society of Appraisers is one. For lawyers, the American Bar Association and/or one's local or statewide lawyer groups would be points of contact.
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