Donated Conservation Easements

When donating an easement to a land trust, a landowner gives up certain rights associated with the land, often development rights. The easement permanently limits certain uses of the property to protect the property’s conservation values. For example, depending on the particular property and its conservation values, a landowner could retain the right to grow crops or engage in forestry, as defined in the easement, while also relinquishing the right to build additional residential structures. Because each property is unique, as are its conservation values, the rights reserved may vary from one property/conservation easement to the next. The land trust is responsible for making sure that a landowner adheres to the conservation terms of the easement. A landowner who donated a conservation easement can sell the land or pass it on to heirs, and future owners of the property are bound by the terms of the easement.

If a conservation easement is voluntarily donated to a land trust for charitable purposes, and if it benefits the public by permanently protecting important conservation resources, the donated easement can constitute a Qualified Conservation Contribution. A Qualified Conservation Contribution that is supported by a Qualified Appraisal and properly substantiated to the IRS can result in a charitable tax deduction on the donor’s federal income tax return, as follows:

• Deduct up to 50% of his or her annual income, up to the value of the easement;

• If the deduction exceeds 50% of annual income, the landowner can carry forward the remainder of the deduction for 15 years.

  • Conservation easements are legally binding agreements created between a landowner and a land trust, government agency, or other non-profit organization. The easement gives certain rights to the holding entity. Land ownership can be thought of as holding a “bundle of sticks”; one stick is the right to build a house and live on the land; one stick is the right to cut trees; one to farm; one stick is the right to draw groundwater, etc. These rights–the sticks–are generally divisible from the main estate and transferable to other parties. To give someone a deeded right to cross land in the form of a right-of-way easement the landowner hands off one stick. The landowner can then give someone else the right to drill for water on their land by handing off another stick. A conservation easement is essentially the handoff (via donation or sale) by the landowner of specific, agreed sticks representing certain intensive land uses potentially inconsistent with the property’s conservation values. Such restricted rights may include: the right subdivide, the right to develop, the right to mine, the right to dispose, etc. A conservation easement essentially conveys such sticks to a non-profit entity or governmental organization (the “conservation easement holder”), except the conservation easement holder doesn’t exercise those rights. Rather, the conservation easement holder has the right to prevent anyone, typically in perpetuity, from exercising the agreed upon intensive and undesirable uses. In a sense, the sticks passed on to the Land Trust are “extinguished” or significantly restricted for the benefit of the landowner, his heirs, and the general public.

    Here’s the key: even after handing over the sticks representing the conservation easement, the landowner still retains many of their original sticks (for example the right to reside on the property, farm, grow timber, hunt, fish, engage in recreation, etc.), including the right to sell the property and/or pass the property on to their heirs. At the same time, the landowner can rest easy knowing their conservation legacy is secure and that their property will never be converted into a subdivision, strip mall, mine, or other development inconsistent with the terms of the conservation easement. text goes here