Snapshot & Benefits:
A conservation easement is a voluntary legal agreement between a landowner and a
conservation or government agency that perpetually restricts specified
activities on a piece of private property for the purpose of conservation. For
example, a landowner may give up the right to subdivide the land into building
sites, while retaining the right to farm the land.
The land that can be protected must have "significant" conservation
values, according to the IRS. These values include forests, wildlife habitats,
open spaces, wetlands, and more. The easement stays with the property and
is binding on all future owners. Conservation easement is a popular tool for
landowners who want to retain ownership of their property and protect it for
generations to come. The landowner essentially gives up "development rights"
however, can continue to own and manage the land according to the rights
outlined in the easement. These easements can be transferred by charitable gift
or sale, and often bring significant tax deductions. A conservation easement is
also a critical tool used to ensure that the land stays within a family for
future generations. The family possession of the land is made possible due to
the fact that the easement removes any development rights, which lowers the land
market value, and in turn lowers the estate tax.
Conservation easements may provide substantial tax savings, because the
landowner receives a federal income tax deduction. The value of the tax
deduction is determined by the value of the easement. The value of the easement
is determined by a professional appraiser and equals the difference between the
fair market value of the property before and after the easement takes effect. As
stated by the IRS, to qualify for this income tax deduction, the easement must
be: a) perpetual; b) held by a qualified governmental or non-profit
organization; and c) serve a valid "conservation purpose."
Conservation easements are not appropriate for every landowner. The IRS requires
that the property in question has "significant" conservation values, such as a
wildlife habitat, wetlands, forests, etc. Landowners should know that
conservation easements may be overridden by eminent domain when the public value
of the proposed project exceeds that of the conservation interest being
protected by the easement. Conservation easements may also result in a
considerable reduction in the sale price of land, because of its restrictions on
Getting It Done:
Consult a professional appraiser in your area before requesting the easement. In
most areas, the landowner will need to contact their local conservation or
government agency, at which they will evaluate the property to determine if it
meets their criteria. If approved, the easement is signed by both the landowner
and agency and is recorded in the local land records.
More Information On This Topic:
What is a Conservation Easement?
The Nature Conservancy: How We Work
American Land Conservancy