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.. Since considerable ;confusion exists over these distinctions, it bears repeating that having a "disqualified l~e" covenngc more man ~percent of the btrildingonly precludes the credit on the expenses allocated to that space. The costs attributable to the balance of the building are still eligible for the credit. Whot Other Tax Benefits Are Avoiloble? Other tax provisions may contribute to the preservation and rehabiliration of historic buildings. They include the deduction for donating a historic preservation easement, the low-income housing credit, and other state and local incentives. Historic Preservation Easements ~ ~. A charitable contribution, deduction is allowed for the donation of a historic . ,.' preservation easement~~o a preserva- tion organization. T~s ,cie,duction applies to both cOmmercial property and owner-occupied housing. An easement is an agreement by owners of property to relinquish their right to alter or demolish property and to abide by other preservation conditions that . are enforced by the donee preservation or~tionorgovernmentalbod~ These restrictions must be permanent to qualify for a federal charitable deduction and must apply to all future purchasers of the property\ A typical agreement protects the facades, of a building but may also restrict the development of adjoining lands and interior features or require mainte- nance of property elements. In' addition, the public must have some visual access to the donated propen;y. The value of the cOntribution of a historic easement is the difference between the fair market vaJ:ue6ftlre ' ' property before the granting of the restriction and the fair market value of the property after the granting of the restriction.' The basis of the structure ,must be reduced by the value of the easement. This basis reduction must be allocated between the building , itself and the underlying land. e , I .~ National R~gister Criteria for Evaluation The, quality of significance in American history, architecture, archeolo~ engineering, and culture is present in districts, sites, buildings; structures, and objects that possess integrity of location, design, setting, materials, workmanship, feeling and association, ~d (a) that are associated with events that have made a significant contribu- tion to the broad patterns of our history; or (b) that are associat.ed with the lives of persons significant in our past; or (c) that embody the distinctive charaCteristics of a type, period, or method of construction, or that represent'the work of a master, or that possess high artistic values, or that represent a significant ~d distinguishable entity wh~se co~ponents may lack in,dividual di~tincti~n; or (d) that have yielded, or'may be likely to yield,' information' imp~rtant in prehistory or history. Low-Income Rental Housing Credit Owners of residential rental property providing low-income housing ~y claim ~parate tax credits for new construction and rehabilitation of low- income housing and for certain costs of acquisition of existing housing to serve low-income individuals, if such credits are issued by the state. The credits are claimed annually for a period of 10 years. There are two low-income housing credit percentages-70 percent and 30 percent. (Those percentages are increased to 91 percent and 39 percent in certain census tracts that have been designated by HUD as being particu- larly in need of encouraged invest- ment.) The 30 percent credit applies - to acquisition if the building will be substantially rehabilitated and to projects receiving a federally subsi- dized rehabilitation expenditure. The 70 percent credit applies to the rehabilitation costs if no federally subsidized expenditures were received. Unlike the historic rehabilitation credit that is taken in the year received (unless passive loss provisions require it to be taken over time) the low- , income housing credit is taken over a 10 year period. The amount for any .given year is based on a "present worth" calculation and will vary somewhat from year to year. The net effect, however, , will be to give the investor the full value of the credit over the 10 years. Residential rf!ntal property is eligible fOr the credits if eithcJ;: IJIIl at least 20 percent of the housing units in the project are occupied by individuals with incomes of 50 percent or less of area median income; 'or iii! at least 40 percent of the housing units in the project are occupied by individuals with incomes of 60 percent or less of area median income. The rent charged to tenants in units with respect to which the credit is allowable may. not exceed 30 percent of the qualifying income. Eligible projects must continuously comply with these requirements for a IS-year period, or the credits will be recap~ed. . This credit may be used in conjunc- tion with the rehabilitation credit. The basis with respect to which the credits are allowed must be reduced by the amount of any rehabilitation credit for which the property is eligible. Since the tax revisions in 1986, a large number of historic rehabilitation projects have been undertaken combining both the rehabilitation and thelow-income housing credits. II