Economic Incentives

Preservation Easements

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How Do I Apply for an Easement?
Contact the Cleveland Restoration Society and complete an easement application. CRS staff will inspect the property and the CRS Board of Trustees will determine whether or not to accept the easement donation. The owner must then obtain appraisals to determine the easement value. CRS will photograph the building for purposes of documentation. The terms of the easement are negotiated. An easement document is then prepared and recorded.

How Are Easements Valued?
The difference in the "before and after" fair market value of the property determines the value of the easement. Using this method of calculation, the fair market value of the property after the granting of the easement is subtracted from the property's fair market value prior to the easement donation. The difference is the value of the preservation easement for federal income, estate and gift tax purposes. The actual value of a preservation easement should be determined by a qualified appraiser. Donors and their appraisers are advised to exercise care in determining valuations that can be defended if challenged by the Internal Revenue Service. Nationally, "valuations of easements have ranged from 1 percent of the fair market value of the land in fee simple, to 91 percent for an easement in the middle of a high-density residential area." *

When is the Best Time to Pursue an Easement?
An owner may utilize both the Investment Tax Credit and a deduction for an easement donation; often both are critical to the financing of a rehabilitation. However, the timing of the easement donation must be carefully considered. An easement may be given at any time, but to avoid recapture of tax credits, it should be donated prior to the building being placed in service or after the five-year recapture period. An easement donated within the first five years following a building being placed in service would result in a recapture of the Investment Tax Credit.

What is an Easement's Relationship to Liens?
The relationship of mortgage liens to easements depends on the order of filing. If an easement is recorded after the recordation of a mortgage lien, it follows the lien until it is paid. Alternatively, if an easement is in place before the recordation of a lien, it takes precedence. In the event that an easement follows a mortgage that is refinanced, the easement would move ahead of the new lien.

What Are the Associated Costs of an Easement?
Costs associated with easement donations vary, but in general are minimal relative to the financial benefit derived from donation. Donors can expect to incur costs for appraisals, accountant, and attorney fees. While fees are negotiable, CRS generally requires an application fee and donation fee before acceptance of an easement. The donation fee is used to offset the cost of monitoring the easement in perpetuity, including annual inspections.

Sample Residential Fees:
Application Fee: $250
Donation Fee: Greater of $500 or 1% of auditors fair market value produced by tax value on currently available tax duplicate
Sample Commercial Fees:
Application Fee: $2,000
Donation Fee: Greater of $1,000 or 5% of easement value
Based on percentage of easement value; no annual fee.

Enabling Legislation: Ohio Revised Code Ann. § § 5301.67 to 5301.70 (page 1990).
NOTE: Owners contemplating the donation of an easement are advised to consult with experienced and qualified real estate appraisers and tax attorneys.

*Establishing An Easement Program to Protect Historic Scenic, and National Resources, Information Series No. 25, Washington, DC: National Trust for Historic Preservation, 1991. when a person holds property, he possesses a "bundle" of rights. The bundle is called a "fee simple estate" and the owner is said to own the property "in fee simple." Each of the rights is sometimes referred to as a "less-than-fee "interest."


For additional information, contact:
Michael Fleenor, Director of Preservation Services

The Cleveland Restoration Society
3751 Prospect Avenue
Cleveland, OH 44115-2705

p: (216) 426-3109
fax: (216) 426-1975