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EASEMENT OVERVIEW


Generally, it takes approximately 120 days to complete the conservation easement process unless you are raising money from third parties which makes the process a securities transaction. If it is a securities transaction it generally takes approximately 180 days. Land that qualifies for a conservation easement includes: farm, beach front property, riverfront property, lake front property, or recreational property. Sometimes, other specialized land parcels such as: golf course, ranch, sod farm, or wine vineyard, may also qualify.
 

Definition Of A Conservation Easement


A conservation easement is a restrictive covenant that allows a landowner to limit the type or amount of development or conserve and protect natural resources on their property while retaining private ownership of the land. The conservation easement is signed by the landowner, who is the easement donor, and the Land Trust or Conservancy, is the party receiving the easement. The Land Trust or Conservancy accepts the easement with the understanding that it must enforce the terms of the easement in perpetuity. After the easement is signed, it is recorded with the County in the record room and runs with the land and binds all future owners of the land.
 
Another way to visualize a conservation easement is to think of owning land as holding a bundle of sticks. Each one of these sticks represents the landowner's right to do something with their property: the right to build a house, to extract minerals, to lease the property, pass it on to heirs, allow hunting. A landowner may give up certain development rights, or sticks from the bundle, associated with their property through a document called a conservation easement.
 
 

Reasons Why Land Owners Grant Conservation Easements


People grant conservation easements because they want to protect their property from unwanted development or they wish to conserve or protect natural resources; while also retaining ownership of their land. By granting a conservation easement, a landowner can assure that the property will be protected forever, regardless of who owns the land in the future. Another primary benefit of granting a conservation easement is that the donation of a conservation easement will provide significant federal and state income tax deductions to the donors or landowners.
 
 

Income Tax Benefits Of Granting A Conservation Easement


Under the current Federal Tax Code, the landowner or the partnership which owns the property which grants the conservation easement receives a tax deduction equal to the difference between: (1) the appraised value of the highest and best use of the property if developed and (2) the appraised value of the property once the conservation easement is recorded which prevents development. This difference is referred to as the value of the charitable donation or charitable gift and equals the total tax deduction that may be taken for federal and state tax purposes subject to certain rules and limitations. This charitable donation which produces the federal and state tax deduction can be taken against current year income and carried forward a number of years until it is used or the time expires.
 
Under Federal Tax Law in 2011, the amount of the deduction that can be used the same year the easement is recorded, is limited to 50% of a taxpayer's adjusted gross income in the year the easement is recorded and the balance could be carried forward up to 15 years until it is used or lost. In prior years, and starting in 2012 unless Congress extends the current law, the deduction of up to 30% of a taxpayer's adjusted gross income can be taken the year the easement is recorded and carried forward up to 5 years.
 
 

Other Financial Benfits Of Granting A Conservation Easement


Other financial benefits include lowering the tax basis for estate tax purposes when the land is passed by will once the current land owner dies, as well as lowers the property or advalorem taxes on the land.
 
Certain states also have additional tax credits for conservation easements subject to certain requirements imposed by the state, this is in addition to already receiving the same tax deduction from the state as received from the Federal Government for the granting of the conservation easement.
 
 

Type Of Land That Qualifies For A Conservation Easement


In general, most any land that has a higher value other than what it is presently being used for qualifies. This would include: land that is currently vacant and could be developed, a farm, timber land, wet lands, scenic areas, historic areas, wild and scenic rivers, undisturbed natural areas, residential subdivision land, or commercial land zoned for a less intense use. In order for land to be qualified for the placement of an easement, it must have value as a conservation resource. In order to be able to place an easement on a piece of property the development potential must meet certain requirements. First and foremost, it must be feasible to develop the land to the projected use. The land must be owned fee simple by the owner wishing to place the easement for a period of at least one year prior to the placement of the easement.
 
 
 
 
 
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