Conservation Easements
Conservation easements have been used for over forty years
by landowners, land trusts, government agencies and
not-for-profit organizations to preserve land in
perpetuity. Properties across the United States and abroad
benefit from the protection of conservation easements,
which are written to protect natural resources,
agricultural land, scenic vistas and historic structures.
Easements are tailored to each property and clearly
identify the rights of the property owner and the
stewardship responsibilities of the third party that will
hold the easement.
Conservation Easement Defined…
A conservation easement is a legal agreement between a
property owner and a land conservation organization, like
the Land Conservancy. Conservation easements protect
important natural resources on a property by restricting
the type and amount of development that can take place on
a particular property. Easements last in perpetuity and do
not change even as a property title is sold to a new
owner.
Terms of the Easement
One of the advantages of a conservation easement is that
it allows a property owner to permanently protect property
while retaining private ownership. Typically, an easement
does not change the way the owner uses the property but
rather identifies a particular resource for protection.
For example, a landowner interested in protecting a
property from development will sell or donate the right to
do so to a not-for-profit conservation organization or
public agency. A detailed conservation easement deed
clearly identifies what resources are to be protected and
which rights will be transferred from the landowner to a
third party. The easement also defines the rights and
stewardship responsibilities of the third party.
Financial Benefits of Conservation Easements
Landowners can sell conservation easements to a third
party for the appraised value of the development rights
for a particular property. The value of the easement is
determined by appraising the market value of the property
without the easement restrictions and the market value of
the property with the easement restrictions. The
difference between these two values is the easement value.
Easement Donation
A landowner can also donate an easement and take advantage
of significant state and federal income tax benefits and
estate tax relief in the amount equal to the market value
of the development rights.
An example of how a landowner’s income tax can be reduced:
A property has an appraised fair market value of $100,000.
The landowner donates a conservation easement to Morris
Land Conservancy. The easement restrictions reduce the
property’s market value to $64,000. The value of the
landowner’s easement donation is $36,000. According to
Internal Revenue Code the landowner is eligible to deduct
an amount equal to 30 percent of his or her adjusted gross
income each year for a total of six years, or until the
value of the gift has been realized. If the landowner has
an annual adjusted gross income of $60,000, she can deduct
$18,000 a year (30% x $60,000) until she has used up the
$36,000 value. In this case the landowner will use up the
gift in two years (2 x $18,000 = $36,000), assuming income
does not change. (The Conservation Easement Handbook)
Stewardship of Conservation Easements
More
Information
If you have any questions or would like additional
information regarding conservation easements please call
Dennis Briede, Stewardship Manager at
973-541-1010 or
e-mail:
dbriede@tlc-nj.org
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