What: A conservation easement is a legal agreement through which a landowner retains ownership of his property yet conveys certain specified rights to the holder of the easement. Conservation easements are usually donated to a non-profit, charitable land conservation organization or a public entity. The majority of easements are donated; however, on rare occasions landowners may be paid some or all of the value of their development rights resulting in an easement. Easements can be tailored to meet the owner’s wishes regarding the future use of his/her land. Typically a conservation easement restricts development or uses that would destroy natural, scenic, or historic areas while at the same time allowing other traditional uses such as farming.
Why: Landowners use conservation easements primarily because they wish to ensure the long-term conservation of land that contains important natural, historic, or scenic features or because they feel a special attachment to their land and want to see it preserved as it is.
Restrictions: The restrictions depend mostly on the landowner’s desires. An owner might want to prevent development of a prime scenic area or wildlife habitat but still allow the cutting of firewood or building of a structure in a less vulnerable portion of the property. The terms of the easement are negotiated with the owner.
How: Like any other permanent interest in land, a conservation easement is created by having both parties sign a document which is recorded in the land records at the local courthouse. The easement is prepared jointly by the landowner and the conservation organization.
Term: For landowners to realize federal tax deductions from donating their easements, the restrictions must be in perpetuity.
Enforcement: The easement holder enforces the terms of the easement. This outside party ensures that the terms will be enforced even if the land changes hands.
Tax Benefits: Local real estate taxes are based on the fair market value of the land as measured by its potential value at the highest and best use, which normally is full development. An easement reduces or removes this potential for development, and Virginia law requires that the tax assessment recognize this reduction in value. A permanent conservation easement also can be considered a “charitable” contribution on federal and state income tax returns. The value of the contribution is the difference between the value of the land before the easement was placed on it and its value after the donation. Some easement donors can realize significant reductions in their state and federal income tax burden over several years.
Estate Planning Benefits: Depending on the donors circumstances, conservation easements can result in lower federal estate taxes and Virginia inheritance taxes, because the estate’s value would be lowered according to any reduced development potential. Heirs might be able to retain land they otherwise would have been forced to sell in order to pay estate taxes.
Individual Benefits: If you are a landowner, conservation easements can assure you that future uses of the land will be compatible with your wishes. In the meantime, you can enjoy the unspoiled beauty of the property, knowing that this benefit will continue in the future.
Community Benefits: Land under conservation easement helps to maintain a supply of clean air and water and a habitat for wildlife. All citizens can enjoy the view of an undeveloped meadow or farmed field without even leaving the road. Easements also are an especially effective way to retain appropriate surroundings for historic resources that are the heritage of the entire community.
