Historic Preservation Easement Program Background
The Federal Historic Preservation Easement (HPE) is a tax incentive that promotes the preservation and rehabilitation of historic buildings by providing tax deductions to certified historic building owners for the contribution of historic preservation easements to preservation-focused nonprofits and governmental entities. Congress codified the easement program in 1980. Lawmakers have consistently supported historic preservation easements as an important tool to incentivize historic building owners to partner with preservation-focused organizations to permanently maintain the historic character of buildings listed on the National Register of Historic Places.
Controversy and Congressional Actions on Easements
- In recent years an aggressive enforcement campaign by the IRS against conservation easements has led to increasing numbers of HPEs being examined and ultimately having tax benefits disallowed by exam. Although the IRS’s focus is on allegedly abusive transactions related to green space/land conservation easements, the effect of the IRS’s campaign has been years of costly litigation for taxpayers who donated HPEs.
- The SECURE 2.0 section of the 2022 omnibus bill passed by Congress placed new anti-abuse limitations on land conservation easements, but specifically excluded HPEs from new limitations. The bill also included new anti-abuse reporting requirements, and directed the IRS to issue safe harbors so that taxpayers could be confident in using the program and claiming tax deductions. Unfortunately, the guidance issued so far has fallen short of expectations and has failed to provide sufficient clarity or a workable safe harbor for the historic preservation community.
Clear Guidance and Resolution of IRS Controversy is Urgently Needed
Preservation Action and the broader historic preservation community have urged Treasury and the IRS to provide clear and workable guidance for historic property owners and preservation-focused HPE recipients seeking to utilize this important, congressionally authorized tax incentive. Specifically, Treasury and the IRS should:
Provide Clear Forward-Looking Guidance: Treasury and the IRS should work with stakeholders from the historic preservation community to craft clear, forward-looking regulations and safe harbors that contemplate the unique characteristics of HPEs, assisting historic property owners and HPE recipients seeking to utilize this important program to permanently protect historic buildings.
