Someone who owns land also “owns” many property rights associated with it. A landowner may volunteer to give up certain rights in order to limit its current and future use to agricultural or keep it in its natural condition.
A conservation easement is a voluntary conservation agreement between a landowner (donor) and a qualified governmental entity or non-profit organization like a land trust (donee). When a person donates or sells a land conservation easement to a land trust, they permanently extinguish certain development rights, while binding future owners of the land to the terms stated in the agreement. Perpetual easements help to protect natural and agricultural lands, wildlife habitat, and scenic views while keeping them in private ownership.
Each conservation easement is individually written to meet the needs and interests of the landowner. It may cover the entire property or just a portion of it, such as the land along the shore or a lake or stream, leaving the option of development open for the remaining part. Permissible land use practices, such as farming, timber harvesting, hunting, future home site development are stated in the agreement, in addition to non-permitted practices such as commercial development for landfills and extraction of minerals, etc.
The public does not have access to property protected by an easement unless granted by the original document.
Resale of Land - If you need to sell your land but don’t want to see it developed, a land trust can help. Prior to the sale, you can work with your local land trust to place a conservation easement on the land before it goes on the market. Some land trusts can also help identify potential buyers for conserved lands.
Donation of Land for Conservation - Donating land for conservation is one of the finest legacies a person can leave to future generations. If you choose to donate your land, your land trust can work with you to identify the best arrangement. The land trust might retain ownership of the property as a permanent preserve or transfer the property to a suitable owner, such as a government agency. In some cases, the land is sold to a private owner, subject to a conservation easement held by the land trust. (Proceeds from such a sale could fund the land trust’s long-term management of the conservation easement and/or help it to protect even more land.) The full market value of land donated to a nonprofit land trust is tax deductible as a charitable gift.
Bargain Sale- In a bargain sale, you sell your land to a land trust for less than its fair market value. This not only makes it more affordable for the land trust, but offers several benefits to you: it provides cash, avoids some capital gains tax, and entitles you to a charitable income tax deduction based on the difference between the land’s fair market value and its sale price.
Donation with a Lifetime Income - If you have land you would like to protect by donating it to a land trust, but you need to receive income during your lifetime, consider a charitable gift annuity or a charitable remainder uni-trustCharitable gift annuities and charitable remainder uni-trusts are most useful for highly appreciated land, the sale of which would incur high capital gains tax.
Income Tax Advantages from Donating a Conservation Easement
Landowners who donate a “qualifying” conservation easement to a “qualified” land protection organization under the regulations set forth in 170(h) of the Internal Revenue Code may be eligible for a federal income tax deduction equal to the value or their donation. The value of the easement donation, as determined by a qualified appraiser, equals the difference between the fair market value of the property before and after the easement takes effect.
To qualify for this income tax deduction, the easement must be: 1) perpetual; 2) held by a qualified governmental or non-profit organization; and 3) serve a valid conservation purpose, meaning the property must have an appreciable natural, scenic, historic, scientific, agricultural, recreational or open space value.
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