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Frequently
Asked Questions about Historic Denver, Inc's Easement Program
What
is a preservation easement?
A "preservation easement" is an interest in real property
that the owner of the property transfers to a qualified organization
such as Historic Denver, Inc. or to a governmental body in return
for benefits to the property owner. These benefits include a) tax
credits and deductions, b) advice and assistance from preservation
experts on maintaining the historic character of the property, c)
recognition of the property as an important part of history, and
d) the increased prestige that comes from owning an historic property.
The
easement holder does not acquire an ownership interest in the property;
rather, the easement holder has a right of access to the property
for the purposes of inspecting the property. As an easement holder,
Historic Denver, Inc. ("HDI") works closely with you to
ensure that your property remains an enjoyable and pleasant place
to live or work. We will work with you to achieve the most efficient
approach when it comes time for any necessary repairs or improvements.
How
can easements be used to encourage historic preservation?
An easement "runs with the land"; in other words,
when you sell your property, the easement is not extinguished, and
the easement will apply to future owners of the property. The easement
will prohibit the demolition of the property and modifications that
harm its historic character. If you're worried about the trend
toward "scrape-offs" (removing historic homes from large
lots, followed by splitting the lot in half to build two new homes)
or "pop-tops" (adding one or more stories to an historic
home), then a preservation easement on your property can guard against
these methods. By donating a preservation easement to HDI, you
are helping preserve the unique heritage of Denver and Colorado.
What
tax benefits are associated with the donation of a preservation
easement?
A donation of a preservation easement has tax benefits under
Federal, state and local tax laws. Under the Internal Revenue Code,
the donor of an easement to an organization such as HDI may qualify
for a charitable tax deduction on the taxpayer's Federal tax return,
and this also serve to reduce your Colorado tax burden. Generally,
an easement donor may deduct the value of the easement. The easement's
value is the difference between the appraised fair market value
of the property prior to the conveyance of an easement and the property's
value with the easement restrictions in place. The Federal charitable
deduction from Federal taxes can be up to thirty percent of the
taxpayer's adjusted gross income. Any excess value may be carried
forward up to five years.
Colorado
also allows the donor of a qualified preservation easement to take
a tax credit for a preservation easement donation. The total amount
of credit cannot exceed $260,000. The credit is computed using
the fair market value of the donation, calculated as one-hundred
percent (100%) of the first $100,000 plus forty percent (40%) of
the excess of $100,000 up to $500,000. Any excess of the tax credit
over the Colorado income tax due may be carried forward up to twenty
years.
You
should seek advice from a tax professional before making an easement
donation.
How
is the easement monitored by HDI?
The staff of HDI will make inspection visits of your property,
at a mutually convenient time, approximately once per year to review
such aspects of the property as the roof, masonry, windows, doors
and paint. HDI staff will also review your plans for alterations
or additions to the property, and if necessary, require that repairs
be made.
Can
I donate an easement on any type of real estate?
HDI will accept an easement
donation on property a) listed individually or as a contributing
structure to an historic district on the National Register of Historic
Places or the Colorado Register of Historic Properties and/or b)
property that is designated by a local government as an individual
landmark or as a contributing structure to a local historic district.
Can
I donate an easement in my will?
Yes you can, although it may be preferable from a tax planning
standpoint to donate the easement during your lifetime. You should
seek tax advice before deciding on the best approach.
Will
the donation of a preservation easement affect the value of my property?
Although the donation of a preservation easement will lower
the value "on paper" of the property (reducing your property
tax bill), the property's intangible value (its marketability) may
be increased by the fact that the property is assured of maintaining
its historic character. There is an increasingly large niche of
buyers who are willing to pay a premium for historically significant
properties.
Why
is Historic Denver, Inc. a good choice for my easement donation?
HDI has been at the vanguard of historic preservation in Denver
for over 30 years. We currently hold over 30 easements on historic
properties and we have the knowledge and expertise to guide you
and future owners in the preservation of the historic character
of your property. Our experienced staff can recommend preservation
approaches, materials and contractors. We can work with you to
assure that any required upkeep of the property, or alterations
to the property, are performed in a timely and cost-efficient manner
that will not jeopardize the National Register listing or landmark
designation of the property.
How
do I go about making my easement donation?
Please contact HDI's Director
of Preservation Services for an application packet and additional
information at (303) 534-5288, ext. 15.
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