Expansion of federal historic preservation tax incentives

[samiam]

Trust for Architectural Easements Sends Letter to President-elect Obama
The Trust for Architectural Easements sends a letter to President-elect Obama regarding the expansion of federal historic preservation tax incentives to stimulate the economy and protect the environment.

FOR IMMEDIATE RELEASE

PRLog (Press Release) â€" Jan 14, 2009 â€" The following is a letter from the Trust for Architectural Easements to President-elect Obama on historic preservation, sustainability and the financial crisis.

Dear President-elect Obama:

Environmental and economic considerations are becoming dominant reasons for preserving older buildings and the neighborhoods they anchor.  Recycling existing buildings is almost always more environmentally efficient than tearing down and building anew.  Rehabilitating historic buildings minimizes waste and the consumption of materials and energy required in new construction.  The positive attributes of rehabilitating older buildings are increased when one considers that maintaining and improving historic buildings and neighborhoods also allows for the continued use of valuable infrastructure: sidewalks, gutters, streets, utility lines, schools, public transportation lines, etc.  If sustainable development is to balance human needs with the carrying capacity of the environment, then preservation is the greenest choice.

The two federal programs that currently encourage property owners to rehabilitate and protect their historic buildings are the Historic Rehabilitation Tax Credit Program and the Historic Preservation Easement Program.  These programs not only sustain and protect our nation’s cultural heritage, but also leverage private capital to rehabilitate historic buildings.  These programs are increasingly important as a means of providing Americans with affordable residential and commercial buildings.

The Trust for Architectural Easements requests your support of the following legislative changes to these programs to help stimulate the economy, protect the environment, and revitalize urban communities:

1.   Expand the Historic Rehabilitation Tax Credit Program to include residential, as well as commercial, buildings.

2.   Allow property owners to combine the tax benefits of the Historic Rehabilitation Tax Credit Program with the Historic Preservation Easement Program without being subject to the impact of a negative tax recapture.

3.   Establish a safe harbor for historic preservation easement donations equal to ten percent of the total value of the property on which the easement is donated through the Historic Preservation Easement Program.

These suggested changes would have an immediate effect on stimulating local economies, and, based upon past experiences at both the federal and state levels, these changes would generate increased tax revenues that would offset any revenue decrease caused by the tax incentives.
The staff of the Trust for Architectural Easements would welcome the opportunity to meet with your transition team to discuss in detail these suggested legislative changes.
We wish you and your new administration success in the coming year.
Sincerely,
Steven McClain
President
The Trust for Architectural Easements is one of the nation’s largest non-profit organizations dedicated to voluntary preservation through easement donations. The Trust protects more than 800 historic buildings across the United States

[samiam]

Heres some info that might be of some interest       http://www.dhr.virginia.gov/pdf_files/Prosperity%20through%20Preservation.pdf

[samiam]

A historic preservation easement is a legal agreement that enables a historic property owner to establish certain preservation restrictions while retaining possession and use of the property. There are three general types of historic preservation easements: facade; interior space; and, development rights.

Facade preservation easements permanently prevent demolition, neglect and insensitive alterations to the exterior facade of a certified historic structure.


Interior space preservation easements permanently prevent demolition, neglect and insensitive alterations to a specified interior space of a certified historic structure.


Development rights preservation easements permanently restrict future development while prohibiting activities that might degrade the historic attributes of a certified historic structure or historically important land area. Development rights preservation easements for historically important land areas are typically categorized as open space conservation easements.
By donating a historic preservation easement in perpetuity to Preservation Easement Trust, a qualified 501(c)(3) nonprofit charitable organization, the property owner promises to maintain the easement-protected property while adhering to the easement restrictions. Once donated, a preservation easement becomes part of the property's chain of title and permanently remains with the historic property binding both the present and future owners.

As an incentive, federal law permits the donation of a historic preservation easement to be treated as a tax-deductible gift. Thus, the property owner, who conveys the historic preservation easement, qualifies for a tax-deductible charitable contribution under Internal Revenue Code Section 170(h) equivalent to the fair market value of the preservation easement, as determined by a qualified real estate appraiser. Because each preservation easement valuation depends upon a number of variables that are unique to each property, including existing historic preservation laws that may already impact the property, there is no "one size fits all" approach to valuing preservation easements. For example, the valuation for a facade preservation easement typically ranges anywhere from 5% to 15% of the historic structure’s fair market value. Whereas, the valuations for development rights and interior space preservation easements do not fall within any typical range and, thus, can vary even more significantly from property to property.

To qualify for a historic preservation easement donation and its associated federal tax benefits, a property must be either a certified historic structure or historically important land area. The tax deduction can be spread over six tax years and, in the majority of cases, may be applied to the property owner's federal and state income tax returns. Individuals, including Partnerships, LLC's, S-Corporations and Trusts that pass tax benefits through to individual shareholders or beneficiaries, are limited to an annual charitable contribution deduction of 50% of the adjusted gross income prior to the charitable contribution deduction in which the non-cash component (i.e., the preservation easement) cannot exceed 30% of the adjusted gross income. In contrast, Corporations that file IRS Form 1120 are limited to an annual charitable contribution deduction of 10% of the adjusted gross income prior to the charitable contribution deduction.

The IRS Form 8283, titled Non-Cash Charitable Contributions, should be filed with the tax return for the year in which the preservation easement is contributed and a deduction is first claimed. This form must be signed by a professional real estate appraiser and by the qualified 501(c)(3) nonprofit charitable organization accepting the donation.
   

[samiam]

What is the Federal Rehabilitation Tax Credit?
The federal Rehabilitation Tax Credit (RTC) encourages the preservation and reuse of the nation's built environment by offering federal tax credits to the owners of historic properties. The tax credits represent a dollar-for-dollar reduction of federal taxes owed. Since its inception in 1976, the credit has encouraged the rehabilitation of more than 31,000 historic properties representing over $31 billion in private investment. This approach to community revitalization has been so successful that nearly half the states now have similar programs.

How the RTC Works
Certified historic structures are eligible for a credit equal to 20 percent of the cost of rehabilitation. Properties built before 1936 that are not eligible for individual listing on the National Register of Historic Places, nor eligible for inclusion in a certified historic district (considered nonhistoric, non-contributing structures) are eligible for a credit equal to 10 percent of the cost of rehabilitation

[stjr]

Interesting and good information.  I hope there are many that take advantage of it and it results in the preservation of many historic structures.

[samiam]

 If they where to expand the Historic Rehabilitation Tax Credit Program to include residential It would be a boom for historic districts and urban areas across the nation and if main steam america could get the message that rehabilitating historic buildings minimizes waste and the consumption of materials and energy required in new construction.  The positive attributes of rehabilitating older buildings are increased when one considers that maintaining and improving historic buildings and neighborhoods also allows for the continued use of valuable infrastructure: sidewalks, gutters, streets, utility lines, schools, public transportation lines, etc. It is staggering the amount of tax dollars that could be saved.

[billy]

These are all wonderful programs.
However, isn't the current dilemma the fact that the tax credits are not as valuable (sellable)
as they were when money was being made by individuals and businesses?