LAND PROTECTION AND PRESERVATION

PRESERVING YOUR LAND

There are a variety of voluntary conservation options that give you, as a landowner, the flexibility to meet your needs while providing lasting conservation benefits. Options include direct transfer of land ownership to a land trust through donation, sale or bequest, and retention of ownership by donation of a conservation easement or sale of development rights. Many of these may include significant income, estate and property tax benefits that you should carefully consider with your legal and financial advisors.

Strategies for Retention of Ownership

Donation of conservation easements, purchase of development rights to a property, limited development strategies (selling or developing part of the land while protecting other parts) and entering into other conservation programs such as land registry, are all options you could consider. Some of these strategies have significant tax benefits.

What is a Conservation Easement?

A conservation easement is a voluntary legal agreement between a landowner and a land trust to permanently protect a property’s natural characteristics by limiting how it can be used. The easement is a deed restriction on the property. The land remains private property, but it can only be developed to the extent specified in the easement. The land can be sold with the easement in place or passed down to successors. A land protection agreement also comes with a stewardship commitment from the land trust to monitor the land and ensure that the easement’s terms are carried through into perpetuity. Agricultural conservation easements are designed to keep lands available for farming.

Who is allowed by law to hold a conservation easement?

A qualified nonprofit, tax-exempt conservation organization – such as a land trust or conservancy – may hold a conservation easement, as can federal, state or local government entities. A land trust is responsible for enforcing the restrictions of the easement document and will monitor the property to determine that it remains in the condition prescribed in the easement document. Many land trusts establish legal funds and endowments to provide for long-term stewardship and enforcement of the easements held in trust.

Who decides what restrictions govern a conservation easement?

The landowner and the land trust or other conservation organization decide together what’s needed to protect the land’s conservation value while, at the same time, meeting the financial and personal needs of the landowner and family. This is a land protection option known for its flexibility. For example, an easement on property with rare wildlife habitat may limit or further prohibit development of any kind, while a farmland easement would allow continued farming and the building of agricultural structures. Land subject to a conservation easement remains privately owned and managed by the landowner, but enforcement of the easement restrictions becomes the permanent responsibility and legal right of the land trust.

Does a conservation easement grant public access to land?

No, landowners retain full title and ownership of their property. However, public access to protected land can be a stipulation of a conservation easement agreement if mutually acceptable to the landowner and the land trust.

What effect does a conservation easement have on a landowner’s ability to sell, transfer or pass the land to his or her heirs?

While restrictions defined in a conservation easement document run with the property forever, land protected in this way can be sold, passed to heirs or otherwise transferred at any time. Transfer of ownership does not affect the integrity or enforceability of the permanent easement. The landowner who establishes a conservation easement ensures that his or her careful stewardship of the land is a legacy that lasts.

What are the financial or tax benefits of donating a conservation easement?

Donation of a conservation easement to a qualified conservation organization is treated as a deduction for income tax purposes as long as it meets federal tax code requirements. The development value of the donation is determined by appraisal. Federal and state income tax benefits vary with each easement but, in general, a landowner can take a deduction of up to 50 percent of income in any year, with a carry-forward period of deductibility of 15 years.

Federal estate taxes may also be affected by the donation of a conservation easement.

Legal and financial advisors should always be consulted regarding current legal and tax requirements.

What is the effect of a conservation easement on property tax assessment?

Land subject to a conservation easement may qualify for a reduction in assessed valuation, thereby reducing property taxes on the land. Under Wisconsin law, local property tax assessors are required to consider a conservation easement when setting the taxable value of the property.

What is purchase of development rights?

Purchase of development rights (PDR) uses the value of the development potential of a property as a method of determining the value of a conservation easement. Under a PDR program, landowners voluntarily sell to a land trust the development value of their land, while retaining full title and ownership of the property. The value of the development rights is determined by appraisal and the sale of the those rights extinguishes the right to develop the property. The land trust places a deed restriction on the property, permanently protecting it from development, and agrees to enforce the terms of the easement restrictions. PDRs are often funded by state or federal grants. PDR is a well-established tool for farmland protection.

Land Donation and Sale

Donating land for conservation leaves a legacy that lasts long after we’re gone. Some landowners prefer to donate land in their wills, while others donate their property up front to take full advantage of income and estate tax deductions.

The donation could also take the form of a reserved life estate. The property can be donated up front, but you reserve the right to live on the land for the remainder of your lifetime.

Land can also be sold at a bargain sale (below market value) to a land trust or conservancy and have potential tax benefits.

Additional information

Please visit American Farmland Trust at www.farmland.org Gathering Waters Conservancy at www.gatheringwaters.org and Land Trust Alliance at www.lta.org Go to “Frequently Asked Questions” in the Land Trust Alliance website. Information from these sources was used in preparing Land Protection and Preservation.