Owning a listed property

Historic preservation easements: the tax deduction and the trade-off

John HarrisonUpdated October 2026

A historic preservation easement is a permanent, recorded agreement in which the owner gives up the right to demolish or inappropriately alter a historic property and hands enforcement to a qualified organization. If the donation meets Internal Revenue Code §170(h) and its regulations, the owner may deduct the easement’s appraised value as a charitable contribution. The property stays in private ownership; the restrictions bind every future owner.

Rules below are as of October 2026. This is the most heavily audited corner of historic preservation tax law, so treat it as a map, not advice.

What the owner gives up

The National Park Service (NPS), which keeps the Register, describes the typical easement in its Technical Preservation Services brochure. The owner places restrictions on development of, or changes to, the property and transfers those restrictions to an organization whose mission includes historic preservation. Once recorded, the restrictions become part of the chain of title and run with the land in perpetuity.

In practice that means:

• No demolition of the protected building, and no changes inconsistent with its historic character.
• Prior approval from the holding organization for proposed alterations, and commonly restrictions on subdividing or developing the site.
• A right of the holder to inspect the property to check compliance.
• If the easement covers only the exterior, interior changes do not need approval so long as they do not affect the exterior appearance or structural integrity.
• No practical way out: the NPS says that to be deductible a preservation easement generally cannot be amended, and 26 CFR 1.170A-14(g)(6) permits extinguishment only by judicial proceeding when changed conditions make continued use for conservation purposes impossible or impractical, with the holder’s share of any proceeds used for conservation purposes.

A mortgage lender must subordinate its rights to the easement holder’s right to enforce the conservation purpose in perpetuity (1.170A-14(g)(2)); otherwise there is no deduction.

Who can hold the easement

Under 1.170A-14(c) the donee must be a qualified organization: a governmental unit, a publicly supported charity, or a supporting organization controlled by one. It must have a commitment to protect the conservation purposes of the donation and the resources to enforce the restrictions. Publication 526 adds that the organization must also have the resources to monitor and enforce the easement and keep baseline records such as maps and photographs of the property’s condition at donation.

The NPS brochure notes that holding organizations often ask donors for an additional cash contribution, usually placed in an endowment to fund annual inspections and legal costs. Ask for the holder’s stewardship terms in writing before committing.

Choosing a holder is a long-term decision. Points worth checking, drawn from the regulatory requirements above:

• Is it a government body or publicly supported charity with historic preservation in its mission?
• Does it have staff, a monitoring programme and a legal defence fund, and how many easements does it already hold?
• What is its stewardship contribution, and is it a one-off or recurring?
• What is its approval process and turnaround when an owner wants to make a change?

Which properties qualify

Section 170(h) allows the deduction for an easement that preserves a historically important land area or a certified historic structure. Per the NPS brochure and Pub. 526:

• A building, structure or land area individually listed in the National Register is already a certified historic structure; no NPS certification is needed. The HPCA instructions add that if an individual listing covers more than one building, Part 1 is still required.
• A building in a registered historic district (a National Register district, or a state or local district certified by the NPS) must be certified by the NPS as contributing to the district’s significance. Pub. 526 states that mere listing as contributing is not sufficient; the owner files Part 1 of the Historic Preservation Certification Application through the SHPO, and the NPS decides. The HPCA instructions say easement Part 1s are judged on the building’s “as is” condition with current photographs, that no Part 2 or Part 3 is needed, that Part 1 carries no NPS fee, and that the property does not have to be depreciable.
• Certification must be in hand by the time of the transfer or by the due date, including extensions, of the return for the year of the transfer.
• Easements on individually listed properties may cover part of a building, such as the front facade or an interior room. For buildings in registered districts, since the 2006 Pension Protection Act the easement must preserve the entire exterior, including front, sides, rear and height, and prohibit any exterior change inconsistent with the building’s historic character. The NPS notes that most holding organizations require whole-exterior coverage anyway.

Check whether an address is individually listed or in a district with the address lookup.

The paperwork since 2006

The Pension Protection Act of 2006 and later changes added requirements aimed at overvaluation. For an easement on a building in a registered historic district, Pub. 526 and the Form 8283 instructions require:

• A written agreement between donor and donee certifying, under penalty of perjury, that the donee is a qualified organization with a preservation purpose and has the resources and commitment to enforce the restriction.
• A qualified appraisal by a qualified appraiser, signed and attached to the return. (For all noncash gifts over $5,000 a qualified appraisal is required; over $500,000 it must be attached; for historic-district easements the NPS brochure says it must be attached regardless of amount.)
• Photographs of the entire exterior of the building.
• A description of all restrictions on development of the building, such as zoning and covenants; attaching the easement deed satisfies this.
• If the deduction claimed exceeds $10,000, a $500 filing fee paid with Form 8283-V. The instructions say the deduction is not allowed without the fee.
• Form 8283, Section B, with the NPS project number where one was issued, and a contemporaneous written acknowledgment from the donee.

For National Register buildings generally, Form 8283, a signed qualified appraisal and the NPS number (if applicable) are required. Pub. 526 also sets the overall limits for qualified conservation contributions: the deduction is limited to 50% of adjusted gross income, reduced by other charitable deductions, with a 15-year carryforward of the unused amount. Partnership and S corporation easements face an additional rule: a contribution exceeding 2.5 times the sum of each member’s relevant basis is disallowed unless an exception applies.

Valuation, and why the IRS watches it

The deduction is the fair market value of the easement, usually measured by the before-and-after method: the property’s appraised value before the easement minus its value after. The NPS brochure is blunt that there are no generally recognized percentages, that the before value must reflect the realistic likelihood of development under existing zoning and local preservation rules, and that where local regulation already imposes the same restrictions the easement may have no material value. The IRS’s conservation easement page says the same thing more sharply: a taxpayer cannot donate rights they do not have.

That page lists recent outcomes. In one historic-easement case the Tax Court disallowed a $23.9 million deduction because the building was not a certified historic structure; in another it cut a $22.6 million claim based on speculative air rights to $900,000 and upheld a 40% penalty. The IRS reports that across litigated syndicated easement cases roughly 6% of claimed deductions were allowed on average, with 40% gross valuation misstatement penalties. Promoters of syndicated schemes have been criminally convicted. None of that affects an ordinary owner who donates an easement on their own long-held building at a defensible value, but it explains why appraiser qualifications, the written agreement and the certification step are enforced strictly.

Interaction with the rehabilitation credit

An owner can combine an easement with the 20% federal rehabilitation credit on an income-producing building, with two cautions from the NPS brochure: granting the easement may be treated as a partial disposition of a building that generated the credit, and where credits were claimed in the five years before the donation the Code requires a reduction in the easement deduction. Form 3468 asks on line 1a whether a §170(h) deduction has been claimed on the property. Any owner considering both should have an adviser model the combination before signing either document.

Properties where an easement is the natural tool

Easements are most often placed on buildings whose character is unprotected by local law, or whose owners want protection to outlast them. Examples with pages here (illustrative only; no claim is made about whether any carries an easement):

• Shirley-Eustis House, a 1741–1756 governor’s mansion in Roxbury, Massachusetts, individually listed since 1966.
• Charles H. Patten House, a Chateauesque and Queen Anne house in Palatine, Illinois.
• Hart House, a First Period dwelling of about 1695–1720 in Lynnfield, Massachusetts.
• Ferndale Main Street Historic District, where a contributing commercial building would need NPS Part 1 certification before an easement deduction.

For how an easement compares with the lighter obligations of plain listing, see what listing means for homeowners and, for state-level incentives that can sometimes be stacked, state historic tax credits.

Not covered here

State income tax deductions and property tax effects for easement donors vary by state and are not covered. Estate tax treatment under §2031(c) is outside this guide. The NPS does not value easements or review appraisals, and neither does this site.

General information, not legal or tax advice. Researched from the sources above and drafted with AI assistance; published under the editor's name, corrections welcome. See the editorial policy.