Tax Policy:

Federal Estate Tax on Historic Properties

GGD-88-56: Published: Mar 31, 1988. Publicly Released: Mar 31, 1988.

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In response to a congressional request, GAO evaluated the effect of the federal estate tax on historic properties, specifically: (1) the extent to which owners broke up or sold historic properties for incompatible uses to pay federal estate taxes; (2) how current estate tax law applies to historic properties; and (3) a proposal to give preferential treatment to estates that contain historic property.

GAO found that: (1) there were no statistical data that either confirmed the existence of a problem or quantified its extent; (2) the reasons given for the sale of historic properties included their high commercial value, a lack of desire to retain ownership, conversion of the real estate to liquid assets for division among heirs, disagreements among heirs over property disposition, and high maintenance costs; (3) maximum tax rates, easements, and special-use valuations for family farms and businesses reduced the number of estates subject to taxation; (4) although the preferential tax treatment proposal could provide relief from estate taxes in certain cases, it did not contain controls to protect the federal government's interests; and (5) alternative ways to protect historic properties include tax deferrals for properties maintained as historic-public-access properties, state preservation programs, and estate planning education programs.

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