Land & Trail
Conservation Easement Explained
by Paul Gallay
Conservation easements are one of the simplest means of preserving land; the
IRS also recognizes them as charitable donations. For those landowners who
might be interested, here's some background information.
What is a conservation easement?
A conservation easement is an agreement by which a property owner can
protect environmentally significant lands, without giving up ownership or
control of the property. In essence, a conservation easement restricts the
amount of development allowable on a given property. Conservation easements
are generally recognized as tax-deductible charitable donations. The
easement does not require that the public be given access to the protected
land.
Who should consider donating a conservation easement?
Any Westchester landowner may create a conservation easement. A landowner
may choose to protect his or her entire property, or retain the right to
build one or more houses at a future time. Properties can be in rural,
suburban, or urban areas around the county. As an alternative to easements,
landowners may donate property for conservation, or contribute funds with
which to purchase land.
Are there tax benefits?
Income Tax: Conservation easements are recognized as
deductible charitable donations under federal and state income tax law. To
qualify for an income tax deduction, the IRS requires that a conservation
easement meet certain "conservation purposes," which include: preservation
of significant habitat, public views, historic lands or structures;
opportunities for the general public to enjoy outdoor recreation or
education; or, other public benefits such as watershed protection. A deed
restriction placed on the property in the absence of a conservation easement
does not provide the tax benefits described above.
Estate Tax: Escalating real property values stemming from
development pressure has made land passing through an estate an expensive
proposition. Because estate tax rates are so high - as much as 55% on
estates over $600,000 - land that has been in the family often has to be
sold to pay the taxes, and the heirs may have little discretion about to
whom it is sold and for what purposes. While legislation has been enacted to
eliminate estate taxes, they will remain in effect for the coming decade.
How is the donation valued?
In order to qualify for a tax deduction, the donor of a conservation
easement must have the value of the easement established by a qualified
appraiser. The appraisal simply measures the development value of the
property, before and after the easement limits went into effect. For
instance, if a conservation easement prohibits all further subdivision, the
appraiser documents that the land could be subdivided under existing
regulations, and measures the number of buildable lots. The appraiser than
calculates the market value of the buildable lots given up, which
establishes the value of the donation for tax purposes.
What is the first step if I am interested in creating an easement?
To get started on a conservation easement, or to learn more about easements,
contact Paul Gallay, Executive Director of Westchester Land Trust at
241-6346. Or visit
www.westchesterlandtrust.org and click on: Easements Q & A.
