Conservation Easements Yield Tax Rewards for
Permanent Land Protection
Imagine a program that gives you a sizable tax credit for protecting
your land forever. That's what a conservation easement does.
A conservation easement provides significant tax incentives to
landowners who donate development rights to approved recipients,
usually land trusts or natural resource management agencies.
Voluntary and flexible, a conservation easement can be a powerful
tool for protecting land from development and for reaching financial
and estate planning goals.
Imagine a program that pays you for protecting your land, its
water, wildlife and open space-forever. That's what a conservation
easement does. Here's how it works.
You find a nonprofit "easement holder," such as a land
trust or a wildlife agency, and agree to permanently transfer your
development rights to them. Land trusts are nonprofit organizations
chartered to work with local landowners and residents to protect
land and historic features from development or destruction. A conservation
easement is usually at the center of the relationship between a
land trust and a landowner, and it is a long-term protection strategy.
Once the landowner has transferred development rights to the land
trust, it's the trust's role to uphold the easement's terms, owner
after owner and generation after generation.
Easements are flexible, voluntary legal contracts, but they are
permanent, are attached to the deed and apply to all subsequent
landowners. Since they are flexible, you may be able to retain
the right to develop a few parcels of land. However, the easement
holder may ask you to agree to certain management practices to
protect the resources. The appraised value of the property is typically
lowered because of the gifted development rights and the loss in
value becomes a charitable contribution under federal tax law.
The easement holder may also give you a cash payment-if it has
a "purchase of development rights" program. In this case,
since there is no charitable contribution there is also no tax
credit.
A conservation easement is not appropriate for all situations,
but both a landowner or a land buyer can use this private land
conservation tool to protect land, relieve estate tax burden and
shelter capital gains. Check with land trusts or conservation real
estate professionals for more information. And, consult your financial
and legal advisors before entering into a conservation easement
contract.
Creative Ownership Strategies
You may not have to own a whole ranch to enjoy protected views
and private recreation. Several landowners and land buyers have
worked out creative ownership strategies that give newcomers
room to roam and protect the rancher's tenure on the land. Possibilities
are limited only by your finances, your ability to define what
you want, and the creativity of landowners and real estate brokers.
