What is a "Conservation Easement"?

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.

• 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