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  • What Is A Conservation Easement?

  • A conservation easement is a restrictive covenant that is a voluntary agreement 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.


  • Why Do People 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 may provide significant financial advantages and tax incentives to the donors or landowners.

  • What Are The 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 fiften years until it is used or lost. In prior years, and starting in 2012 unless Congress extends the current rules, 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 five years.
    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.

  • What Tax Benefits Can I Expect From Granting A Conservation Easement?

  • A donated easement may be treated as a charitable gift, making the value of the easement tax deductible. In order to qualify for the federal tax deduction, the easement must be: (1) perpetual; (2) held by a qualified conservation organization; and (3) serve a valid conservation purpose, which includes (a) the preservation of land areas for outdoor recreation by, or education of the general public; (b) the protection of a relatively natural habitat of fish, wildlife, plants, or similar ecosystem; (c) the preservation of open space (including farmland or forest land); and (d) the preservation of a historically important land area or certified historic structure. In addition, the value of the conservation easement must be determined by a "qualified appraisal".
    In 2011, the Federal Tax Incentive rewards agricultural easement donors at a higher rate. Eligible farmers or ranchers are defined as tax payers who earn more than 50 percent of their gross income from the business of farming during the taxable year in which the contribution is made. In this case they may deduct the easement's value up to 100 percent of their adjusted gross income, with a fifteen year carry-forward period. Other landowners are able to deduct up to 50 percent of their AGI with a fifteen year carry forward. If this incentive doesn't attain a permanent status by the end of 2011, the deduction reverts back to 30% of a landowner's AGI for everyone in the year of the donation with a five year carry-forward. Many states also offer income tax credits for the donation of conservation easements.
    Another important tax benefit is the reduction of estate taxes. Because estate taxes are based on the highest economic use of the parcel, these taxes can be substantial even if the land is being used as a farm or ranch. This can put considerable financial strain on heirs and in many circumstances may force them to sell all or part of the land in order to pay estate taxes. Conservation easements can help prevent this and aid in the intergenerational transfers of intact properties. By granting away development rights the value of the land is decreased, which lowers the value of the land for estate tax purposes, and can provide a significant reduction in the estate tax burden on family members. This is particularly helpful in situations where the cultural, sentimental, and historical uses of the land are much more important to the heirs than its economic value.
    In addition to this decrease, under the 1997 Taxpayer Relief Act, a conservation easement may reduce estate taxes by 40%, up to a maximum of $500,000, if it meets the requirements for a qualified conservation easement. It would be prudent to consult a tax professional to determine if a conservation easement qualifies as a qualified easement, but some of the key conditions are: (1) Ownership of land for more than 3 years prior to death, (2) Donation of the easement occurred by the decendent or a member of his family, (3) Easement must prohibit all but minimal commercial recreational use of the land, and (4) the easement must decrease the value of the land by at least 30% to qualify for maximum estate tax benefits.
    The granting of a conservation easement can in some cases also lead to a reduction in property taxes. Because states vary widely in how they assess property taxes the effect of a conservation easement on such taxes is equally variant. In some states landowners may see a reduction of property taxes, but it is not guaranteed. Because the tax benefits vary between states, those considering the grant of a conservation easement should consult a tax professional that has a solid foundation in this complex topic to determine the benefits they can reasonably expect and the specific requirements they must meet to be eligible for those tax benefits.
    It is important to note that granting a conservation easement by a private landowner will not completely eliminate tax burdens on the owners. The property will remain on the tax rolls but the restrictions placed on the property can often lead to a reduction in the taxes assessed. Please remember that the landowner retains responsibility for any property tax liabilities.
    The Federal And State Tax Deductions Generated By The Charitable Donation Of Placing A Conservation Easement On Land Does Not Contribute To Or Trigger The Alternative Minimum Tax Or AMT.

  • What Type Of Land 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.

  • How Long Does An Easement Last

  • To be eligible for a federal income tax deduction, the conservation easement must be "perpetual", that is, it must last forever. The Conservancy or Land Trust monitors the property, generally once a year, to assure that the easement is not being violated. If the easement has been violated, the Conservancy or Land Trust will take whatever steps are necessary to uphold the terms of the conservation easement, including taking legal action. Because of this obligation, the Conservancy or Land Trust asks all conservation easement donors to make a financial endowment to the Conservancy's or Land Trust's Fund. This fund ensures long-term monitoring and enforcement of every easement the Conservancy or Land Trust receives.

  • Why Would I Want To Give Up Any Of My Property Rights?

  • One of the most cited reasons for pursuing a conservation easement is the landowner's desire to protect the condition and uses of his or her land long into the future. For instance, by granting a conservation easement, the owner of a family farm and ranch insures that the property remains available for agriculture uses. In addition, there are a variety of tax benefits available for grantors of conservation easements.

  • What Kind Of Financial Advantages Result From Donating A Conservation Easement?

  • For people who want to preserve their land, a conservation easement will assure that the land will never be used in a way contrary to their intent. Financial benefits, in the form of tax deductions, are also associated with conservation easements. Conservation easements often make it much easier to pass the land to the owner's children without paying large estate taxes due to the value of the land being reduced once the conservation easement is recorded. Generally, property or advalorem taxes on the real estate is also lowered.



  • What Activities Are Allowed On Land Protected By An Easement?

  • The activities allowed by a conservation easement depend on the landowner's wishes and the characterisitics of the property. In some instances, no further development is allowed on the land. In other circumstances, some additional development is allowed ,but it can only occur in portions of the land carved out of the conservation easement, however the amount and the type of development is less than would otherwise be allowed. Conservation easements may be designed to cover all or only a portion of a property. Every easement is unique, tailored to a particular landowner's goals.

  • Can The Land Owner Still Sell Or Give The Property Away?

  • The landowner continues to own the property after executing a conservation easement. Therefore, the owner can sell, give, or lease the property, as before. However, all future owners assume ownership of the property subject to the restrictions of the conservation easement.

  • Who Owns The Land That Is Under An Easement?

  • The landowner who donated the easement remains the owner of the land. The land can be bought and sold. However, the easement "runs with the land" and applies to all future landowners. The landowner continues to bear all costs and liabilities related to ownership and maintenance of the property. The Conservancy or Land Trust monitors the property to ensure compliance with the easement's terms, but it has no other management responsibilities and excercises, or no direct control over other activities on the land.

  • Can Property Owners Still Live On And Use The Land If They Donate An Easement?

  • Yes, conservation easements typically allow for changes and additions to houses, construction of farm buildings, and other normal agricultural practices. Conservation easements may be drafted in various ways. For example, some landowners decide that, for the protection of the land, all development rights should be excluded, so that the land will always look substantially as it does now. Another landowner might wish to allow the option of adding a limited number of future dwellings in an area that has been carved out of the conservation easement.


  • Does The Easement Have To Cover All Of The Landowner's Property?

  • No. Some conservation easements only cover a portion of the landowner's property. Again, it depends on the landowner's wishes. For example, if someone owns 80 acres, of which 35 acres are wetlands, the owner may decide to restrict development only on the 35 acre wetlands. The remaining 45 acres would not be covered or affected by the easement.


  • Can Conservation Easements Be Donated By Will?

  • Yes. The landowner should contact the Land Trust or Conservancy in advance, however, to ensure that the Land Trust or Conservancy will accept the gift. It is often better to donate a conservation easement during one's lifetime.

  • Is There A Yearly Deadline For Donating An Easement To The Land Trust Or Conservancy?

  • No. The Land Trust or Conservancy accepts requests at all times. However, if you wish to donate a conservation easement during a particular calendar year for the tax benefits, you should contact the Land Trust or Conservancy by September. The conservation easement must be recorded by December 31 or earlier in the same tax year if the donor wants the tax deduction for that year.

  • How Are My Property Rights Affected By A Conservation Easement?

  • With regard to land, or "real property," private property rights include the right to reasonably develop and use the property. By placing restrictions on usage and development, a landowner is voluntarily giving up a portion of their rights. These development rights are considered extinquished and can never be used, sold, or transferred. Other private property rights include the right to sell or lease the property, as well as the right to exclude others from accessing the property. Typical conservation easement is unique and subject to conditions agreed upon by the parties.
    The easement is specifically catered to the property owner's wishes. Thus, current use and management of the land is usually maintained, with minimal to no impact on day-to-day activities. Indeed, in a well-planned document, the only rights transferred are often rights that the property owner had no intention on exercising, such as the right to build a subdivision or shopping mall. In addition, conservation easements often do not limit development altogether and the property owner is free to designate areas that can be used for buildings, such as barns or other agricultural structures or home sites. A conservation easement does give the grantee, which is the Land Trust or Conservancy, certain rights, such as the right to enter the land during "monitoring visits," to ensure the terms of the easement are being upheld and the right to enforce restrictions on the use of the land in accordance with the terms of the conservation easement.

  • What Is The Relationship Between My Mineral Development Rights And A Conservation Easement?

  • The nature of the relationship between mineral rights and conservation easements depends on who owns the mineral rights and the type of mining involved. Due to the incompatibility of surface mining and conservation purposes, the tax code prohibits surface mining. However, a tax deduction for a conservation easement will not be denied where certain methods of mining that may have limited impact on the real property.
    If the estate is "split" and the rights are owned by different parties, the owner of the mineral estate will usually have the right to reasonably use the surface to extract the minerals underneath. Thus, in a "split estate," the surface owner may not be eligible for the tax deduction unless they can show that the probability of surface mining on their land is so remote as to be negligible." This determination requires that a landowner have a mineral remoteness assessment (commonly called a mineral report) performed by a certified geologist to determine either that there are no commercially important minerals on the property or that it is commercially impractical to mine any minerals that are present.
    If the landowner owns the mineral rights, for federal tax credit eligibility it is usually adequate that the conservation easement contain a provision explicitly prohibiting surface mining. If a landowner wishes to retain rights to certain mineral extraction such as sand, gravel, rock, or soil for personal use, it is important that the amount and location of the activity is confined in a manner that does not interfere with the purposes of the conservation easement. If the easement drafter is not careful in limiting the scope of mining, it may not be eligible for these federal tax benefits. In fact, a 1997 case denied the tax deductions stemming from two conservation easements where the landowner retained the rights to extract sand and gravel. Please keep in mind, retaining mineral rights could reduce the overall value of the conservation easement.

  • What Is The Relationship Between Conservation Easements And My Oil/Gas Development Rights?

  • As with the surface mineral rights, a landowner can retain limited oil and gas development rights and still remain eligible for the federal tax deduction. The tax regulations give two examples of situations where the retention of oil and gas development rights do not affect the tax status of a conservation easement; one addresses a situation where the landowner retains the mineral rights and the other where the landowner has conveyed the mineral rights to a third party. If a landowner controls the mineral rights and retains oil and gas development rights he or she will still be eligible for a tax deduction as long as the owner ensures that "the drilling will have no more than a temporary, localized impact" that will not interfere with the overall conservation purpose of the donation.
    A landowner can also still benefit from the tax deduction where he or she conveys te rights to mineral development to a third party (as in a lease), but where the easement language prevents all surface mining is based on an adjacent parcel but targets minerals under the parcel placed under a conservation easement. Additionally, as with mineral development, retaining oil and gas rights will reduce the overall value of the easement.

  • What Is The Relationship Between Conservation Easements And My Wind Power Development

  • Given increased public and commercial interest in renewable energy, landowners may want to consider the impact that conservation easement will have on the ability to develop renewable energy on protected land. Some land trusts support the ability to develop renewable energy on protected land. Some land trusts support the development of renewable energy so long as it does not frustrate the purposes of the conservation easement.
    Other land trusts are less receptive to the idea of allowing wind farm development and some might only allow it for personal use. Landowners who wish to have the option to develop renewable wind energy on their property should be familiar with their potential land trust's wind policies prior to entering into any final agreement. Since this is such a new area of law, an expert should be consulted regarding how the retention of alternative energy development rights could affect the tax status of the conservation easement.

  • How Do Monitoring Visits By The Land Trust Or Conservancy Work?

  • The purpose of monitoring visits is twofold: (1)To ensure that the terms of the conservation easement are being adhered to by the landowner; and (2) to continue building relationships with landowners. Typically, monitoring visits occur once a year but may occure more frequently when the easement is vulnerable to frequent violations (e.h. sensitive natural areas). Monitoring procedures are established during the conservation easement negotiations, and should not result in surprise or intrusive site visits. The Land Trust or Conservancy contacts landowners far in advance to determine a mutually agreeable date, often encouraging them to participate in inspections so that they are familiar with monitoring procedures. Monitoring visits can occur in several ways including: aerial monitoring, ground monitoring, and monitoring by boat.
    While monitoring is an important tool for evaluating that a landowner is complying with the terms and conditions of the conservation easement, it is important to note that landowner violations of the terms of a conservation easement are rare. In a survey of 7,000 of the cases of involving major violations occurred against subsequent landowners and not the original grantors of the conservation easement.

  • Will A Conservation Easement Unreasonably Reduce The Value Of My Land?

  • It is true that a conservation easement will reduce the resale value of real property by granting certain rights, such as the ability to subdivide and develop the land, to an organization such as a land trust. In exchange for that reduction, the landowner has received income tax and estate tax benefits. Value may also be gained in the sense that the owner has the reassurance of knowing that the land will remain intact for years to come. In addition, placing land under a conservation easement may actually increase the value of the surrounding landscape due to the increased significance the public now places on open space.
    The existence of privately created open space can also take the pressure off local governments to invest in land conservation, thus helping to keep property taxes low. In this way a conservation easement reduces the cost of owning the land. This is particularly important in situations where the landowner is considering developing part of his or her land simply to afford continuing to live there. In situations where conservation easements are used to ensure that farm or ranchland is reserved for farming and ranching, the existence of the easement will actually make it more affordable for subsequent landowners to use the land for production agriculture.
    Because the rights to subdivide and develop the land have been restricted, the cost to purchase the land is often reduced and the subsequent purchaser is simply paying for the current use of the land which is maybe farming or ranching and not development. While this means less money for the seller, it also offers the peace of mind that the land will only be used for farming or ranching in the future. Even though the resale value of land encumbered with a conservation easement is reduced, the significant tax benefits that flow from such a restriction can help offset the reduction in value.


  • Do Banks Offer Loans On Land Encumbered With A Conservation Easement?

  • Because the conservation easements reduce the value of the property, the size of a loan available for mortgaging a property will be reduced. Indeed, the case of purchased easements, landowners can use money from selling their development rights to pay down debts owed on the property.
    Many banks eagerly support this aspect of easements. It is important to note, however, that placing a conservation easement on property that is currently mortgaged requires agreement by the lender to subordinate and should be considered early in the process.

  • Can Conservation Easements Lead To The Mismanagement And Depletion Of The Land?

  • Some critics are concerned that conservation easements offer landowners an incentive to quickly deplete their property of its resources, based on the fear that the easement's restrictions will prevent them from capitalizing on the presence of the resources, such as timber, water, or wildlife.
    The purpose of a conservation easement is to ensure the continued use of the land for particular purposes. Any restrictions placed on the land are not an effort to limit the use of a particular resource, but rather to conserve its use to long-term sustainable levels.
    Additionally, restrictions on the use of the land are negotiated and established prior to the grant of the easement. It is this legally recorded document that governs the Land Trust's or Conservancy's future oversight - new conditions can not be added without amending the easement, which is neither quick nor easy, or accomplished without the permission of all parties.

  • Are Land Trusts Or Conservancies Really Arms Of The Government Aimed At Taking Private Property And Converting It To Government Ownership Or Control?

  • There is a fear being perpetuated that land trusts are in collusion with the government, with an ulterior motive of transferring land from private ownership to government control unbeknownst to the landowner. Legally, this is not possible, and there is no evidence to support it. Under the Constitution of the United States, the federal government can only take private property through its power of eminent domain.
    When exercising eminent domain the government must, in addition to proving that the taking is for a public purpose, pay just compensation to the landowner. Of course, if a landowner cannot afford to pay taxes on the property, the property may be subject to a tax lein.
    However, tax liens are not directly related to conservation easements, and a potential grantor should engage competent and qualified professional advisors during the negotiation process to ensure the easement does not frustrate their ability to pay taxes.

  • Do I Have To Fear An IRS Audit If I Put An Easement On My Property?

  • Although there is no way to predict the actions of the Internal Revenue Service, the vast majority of conservation easement transactions completed over the last 30 years have not received undue scrutiny. As with any charitable donation, following the IRS regulations and National Land Trust Alliance's Standards and Practices will help support a landowner in defense of any potential IRS audit.

  • Will A Conservation Easement Tie The Hands Of My Heirs?

  • Conservation easements are often referred to as "perpetual" easements because they are intended to last forever. A great deal of careful thought should go into any easement language because of its long-term implications. Although, placing restrictions on land "forever" may seem like an enormous burden, it is really no different than if the landowner were to exercise certain development rights. For example, a decision to pave roads or sell land for the construction of a shopping center is essentially making a permanent decision.
    While land that has been paved or sold isn't technically encumbered in perpetuity, in a practical sense it will never be the same. Thus, many choices that a landowner can make will have a lasting impact, regardless of whether or not that is an upfront consideration.
    Although conservation easements are designed to be perpetual, there are situations that can lead to an easement's termination or modification. For example, if the purpose of the easement has become "impossible or impractical" the holder of the easement can ask the court, in what is called a cy pres proceeding, to allow for the modification or termination of the easement. Where such change is granted, the holder of the easement must use the compensation from the termination of the easement to accomplish conservation measures in a different manner or at a different location.
    Additionally, many conservation easements contain an "amendment provision" which allows the easement to be amended if the amendments are consistant with the purpose of the easement and both the landowner and Land Trust or Conservancy agree on the change. Such a provision allows for making changes to the easement without going through the cy pres proceeding. The IRS is beginning to scrutinize amendments, and both cy pres proceedings and amending easements should be viewed as a last resort and not considered a potential future option for changing undesirable language.

  • Can Conservation Easements Prevent Me From Using My Land As I like?

  • Conservation easements are voluntary deed restrictions that are meant to protect either current or mutually acceptable uses of the land. In some situations, this may require the use of commonly acceptable conservation management practices to ensure current and future uses, but it is not a categorical restriction of past activities. Landowners should exercise their right to walk away from any negotiations they feel are not in their best interests or the interest of their heirs. It should be noted that if funding is involved, as in a purchased easement, potential funding sources may require additional restrictions.

  • What Criteria Must Conservation Easements Meet To Be An Authorized Charitable Donation?

  • Preservation of land for outdoor recreation by, or the education of, the general public.

  • Protection of relatively natural habitat of fish and wildlife or plants, or a similar ecosystem.

  • Preservation of open space (including farmland and forest land) where such preservation will yield a significant public benefit and is for the scenic enjoyment of the general public or pursuant to a clearly delineated federal, state, or local government conservation policy.

  • The preservation of a historically important land area or a certified historic structure.



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