Let’s
start with a Definition - a conservation easement (also called a conservation
covenant or conservation restriction) is an encumbrance— sometimes
including a transfer of usage rights (easement) — which creates a legally
enforceable land preservation agreement between a landowner and a government
agency (municipality, county, state, federal) or a qualified land protection organization
(often called a land trust), for the purposes of conservation. It restricts
real estate development, commercial and industrial uses, and certain other
activities on a property to a mutually agreed upon level. The property remains
the private property of the landowner.
Purpose - The primary purpose of a
conservation easement is to protect land from certain forms of development or
use. Lands for which conservation easements may be desirable include
agricultural land, timber resources, and/or other valuable natural resources
such as wildlife habitat, clean water, clean air, or scenic open space.
Protection is achieved primarily by separating the right to subdivide and build
on the land from the other rights of ownership. The landowner who gives up these
"development rights" continues to privately own and manage the land
and may receive significant state and federal tax advantages for having donated
and/or sold the conservation easement. Perhaps more importantly, the landowner
has contributed to the public good by preserving the conservation values
associated with their land for future generations. In accepting the
conservation easement, the easement holder has a responsibility to monitor
future uses of the land to ensure compliance with the terms of the easement and
to enforce the terms if a violation occurs.
Baseline Document - Baseline documentation reports are the cornerstone of
effective land conservation. As they record the condition of the land at the
time the easement was put in place, they are essential in identifying the
conservation attributes and organization plans on protecting as well as changes
to the land over time, whether human or natural
Value of the Easement – is determined by the value before and after the
conservation easement i.e. the loss in
value due to giving up the development rights. There are appraisers who
specialize in this field. The IRS estimates that 70% of the appraisals they
review are incorrect, but most do not significantly affect the economic
advantage of a donation. The primary point….. “pick the right appraiser”.
A team of people are required for a successful
easement. This would include a Land Trust, Appraiser, CPA and an attorney
What are the specific benefits to the landowner?
Below is a list of the
general benefits for considering a conservation easement:
• The landowner maintains control and ownership of the property. The Owner may create envelopes when designing the easement. Envelopes allow the owner to construct houses, continue farming operation and forestry operations. The key is to integrate these into the easement. These activities will be restricted after the easement is implemented.
• The landowner maintains control and ownership of the property. The Owner may create envelopes when designing the easement. Envelopes allow the owner to construct houses, continue farming operation and forestry operations. The key is to integrate these into the easement. These activities will be restricted after the easement is implemented.
• Each conservation easement is individually structured to meet the needs of the landowner, along with the conservation criteria, and can be structured broadly or specifically.
• The landowner assures the property is protected for future generations
• The landowner continues to receive income from his/her land from agricultural or forestry purposes
• The property may be sold and the restriction travels with the property.
• Future generations are assisted in the transfer of the land by favorable estate tax treatment. This happens because after the rights to develop it are sold, the highest and best use of the land is usually agricultural resulting in a lower appraised value for determining the value of the estate.
• Landowners may gain income tax advantages.
Federal
– Tax Deduction of 30% of AGI + 5 year
carry forward
Georgia
- 25% tax credit for value of the
easement (each state treats
conservation easements differently)
A great resource tool is the Land Trust Alliance
website: www.lta.org
In my humble opinion the easements are a great tool
for high income people/entities who need ways to offset income taxes and plan
to keep the property in the family for generations to come !
For Information on Buying or Selling Land contact G.
Kent Morris, ALC, RF at (706) 457-0090
