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.
consider donating a conservation easement?
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?
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.
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
www.westchesterlandtrust.org and click on: Easements Q & A.