We hear the term “conservation easement” often and almost always it is followed by a 32 page document explaining what it is, only for most people to come away still somewhat confused on what it is and what the pro’s and con’s are. Here is what you need to know……
What exactly is a conservation easement?
In a nutshell, a conservation easement is a binding legal contract between a landowner and another group (often called the easement holder) that ensures conservation is maintained on a given piece of property. Easement holders can be in the form of local, state, or federal government agencies, or non profit organizations known often as land trusts. The protected property or easement is still owned by the landowner but the easement restrictions stay with the property. You will often hear the term that conservation easements are granted in “perpetuity” – this simply means that the easement is forever and if the landowner sells his or her property, the conservation easement stands and continues with the new ownership.
What are the benefits of a conservation easement?
In addition to significant income tax incentives both on the federal and state level and a reduction of property taxes, conservation easements are a great way to protect your property and keep it in its current state for future generations.
What does it cost?
The biggest cost to the landowner will be in the development potential that might be lost. Landowners are also responsible for the costs usually associated with any land transaction such as attorney fees, surveys, and appraisals. Landowners must pay for a qualified appraisal in order to receive tax credits. Additionally, land owners might have to provide the easement holder with a “stewardship endowment” or donation to help cover the cost of taking care of the easement.
What does the landowner give up in this scenario?
Although each easement is negotiated individually between the parties, typically giving up the right to develop and the right to change natural features are included with a conservation easement……basically, it can include anything that will alter the property from its natural state or be harmful to the land. Having said that, many conservation easement agreements do allow for additional structures to be built (as long as it is not for development purposes) and they do allow for ongoing agricultural or forestry operations to continue. All of this is usually spelled out in the Land Use and Management Plan that comes with the conservation easement.
How does a landowner go about doing this?
Any landowner can place an easement on their property, and there is no minimum or maximum size requirements. Having said that, a tract of land must meet conservation purposes as defined by the IRS in order to qualify as a charitable gift and to receive federal tax incentives. For state tax incentives, the land must meet individual state requirements typically defined by the state DNR. For the landowner, the first step is to find an organization or agency interested in becoming the easement holder. Most states have a state land trust organization that identifies all qualified organizations to hold conservation easements. If you have trouble finding that information, please comment below and we will help point you in the right direction.