About Conservation Easements

What is a Conservation Easement?

A conservation easement is a voluntary legal agreement between a landowner and a land trust that permanently limits some land uses (usually subdivision and development) in order to permanently protect the property's natural characteristics. Each conservation easement is unique and tailored to the specific needs of the landowner and the land.

Conservation easements allow landowners to continue owning and using their land and to sell it or pass it on to their heirs. Conservation easements, now the most popular means to protect land, came into widespread use after the Tax Reform Act of 1976 explicitly recognized them as tax deductible donations.

Unlike deed restrictions and covenants, a conservation easement comes with a stewardship commitment from the Land Trust ensuring that there will always be someone monitoring the land to see that its natural values are protected. Future owners also will be bound by the easement's terms, and the land trust is responsible for making sure the easement's terms are honored in perpetuity.

A conservation easement donation that meets federal tax code requirements - in other words, that provides public benefit by permanently protecting important conservation resources - can qualify as a tax-deductible charitable donation. For income tax purposes, the value of the donation is the difference between the land's value without the easement and its value with the easement. See Potential Tax Benefits of Conservation Easements for more information.

Most importantly, a conservation easement can be useful for passing land on to the next generation. By removing or limiting the land's development potential, the easement lowers its market value, which in turn lowers estate tax. Whether the easement is donated during life or by will, it can make a critical difference in the heirs' ability to keep the land intact.

Other Conservation Options

Landowners may also wish to consider donating their land for conservation purposes. This is truly one of the finest legacies a person can leave to future generations. An outright donation of land to a land trust releases the landowner from the responsibility of managing the land and can provide substantial income tax deductions and estate tax benefits, while avoiding any capital gains taxes that would result from selling the property. Most importantly, if the land is donated because of its conservation values, those values will be protected. For more information on Planned Giving options, click here.

Landowners can also choose to continue living on the land by donating a remainder interest and retaining a reserved life estate. In this arrangement, a landowner donates his or her property during their lifetime, but reserve the right for themselves or any other named persons to continue to live on and use the property.

By donating a remainder interest, the landowner can continue to enjoy their land and may be eligible for an income tax deduction when the gift is made. The deduction is based on the fair market value of the donated property less the expected value of the reserved life estate. See Potential Tax Benefits to Conservation Easements for more information.