What is a conservation easement?

From the Land Trust Alliance Website:

What is a conservation easement?

A conservation easement is a voluntary legal agreement between a landowner and a land trust or government agency that permanently limits uses of the land in order to protect its conservation values. Landowners retain many of their rights, including the right to own and use the land, sell it and pass it on to their heirs.

What are the benefits of conservation easements?

Conservation easements allow people to protect the land they love. They are the number one tool available for protecting privately owned land. All conservation easements must provide public benefits, such as water quality, farm and ranch land preservation, scenic views, wildlife habitat, outdoor recreation, education, and historic preservation. 

How does a conservation easement restrict use of the land?

That depends on what you’re trying to protect. If you’re placing land under easement, you can work with your land trust to decide on terms that are right for the land and right for you.

For example, if it’s important to you to be able to build a home on the land or to subdivide your property, you may be able to reserve those rights -- as long as you’re still protecting important conservation values (such as productive farmland or wildlife habitat). You can use an easement to protect your whole property or part of it.

While every easement is unique, there are a few general rules. Farming and ranching are usually permitted. Development is almost always limited. Surface mining is almost always off-limits. While some easements require public access, many do not.

Can I sell a conservation easement?

Most conservation easements are donated. But if your land has very high conservation value, your land trust may be willing to raise funds to purchase an easement. In particular, a number of federal, state, and local programs provide funding to purchase easements on farm and ranch land.

Can a conservation easement reduce my income taxes?

A conservation easement donation can result in significant tax benefits, if it meets the requirements of federal law. It may lower your federal income tax, because you can claim the value of the easement as a tax-deductible charitable donation. It may also lower your state income tax, depending on your state laws.

Can a conservation easement help with estate planning?

Yes. Often, one of the biggest advantages of a conservation easement is that it helps you pass on your land to the next generation. A conservation easement helps you plan for the future of the land and it can significantly lower your estate taxes.

Are conservation easements permanent?

In most cases, yes. Most easements "run with the land,” meaning that all not only the original owner but all owners that come after them are subject to the easement. A few conservation programs use temporary easements -- but only permanent conservation easements qualify for income and estate tax benefits.

How much land is protected by conservation easements?

More every year! Conservation easements are becoming very popular, in part because of their flexibility working with landowners to achieve their goals. As of 2010, nearly 9 million acres in the United States were protected by state and local land trusts through conservation easements.

How do I put a conservation easement on my land?

Start by talking with Pure Midway to see if we are a good fit for your project. Talk to us about the conservation values you want to protect and how you want to use the land. Be sure to talk with family members as you consider your conservation options. This is a big decision, so it’s important to consult with your attorney and financial advisors, too.

What is the role of Pure Midway?

It’s Pure Midway’s job to make sure that the restrictions described in the easement are actually carried out. To do this, Pure Midway monitors the property on a regular basis, typically once a year. Pure Midway will work with you and all future landowners to make sure that activities on the land are consistent with the easement. If necessary, Pure Midway is responsible for taking legal action to enforce the easement.   

Do I need to make a stewardship contribution?

It depends. When a land trust agrees to hold a conservation easement, they take on significant stewardship responsibilities. Most land trusts maintain a stewardship fund to make sure they’ll be able to carry out these responsibilities. Often, land trusts ask easement donors to contribute to this fund. But, usually, the amount of the stewardship contribution is more than offset by the tax incentives for donating the easement.

Learn More at:

 Overview of Benefits for Landowners

From Land Trust Alliance Website:

Landowners have found that conservation easements offer great flexibility, yet provide a permanent guarantee that the land will not be developed. For example, an easement on property containing rare wildlife habitat might prohibit any development, while one on a farm might allow continued farming and the building of additional agricultural structures. An easement may apply to only a portion of the property, and need not require public access.

A landowner may sell a conservation easement, but usually easements are donated. If the donation benefits the public by permanently protecting important conservation resources and meets other federal tax code requirements, it can qualify as a tax-deductible charitable donation. The amount of the donation is the difference between the land’s value with the easement and its value without the easement. Placing an easement on property may or may not result in property tax savings.

Perhaps most importantly, a conservation easement can be essential for passing land on to the next generation. By removing the land’s development potential, the easement lowers its market value, which in turn lowers estate tax. Whether the easement is donated during life or by will, it can make a critical difference in the heirs’ ability to keep the land intact.



Tax Incentives: A Key to Conservation Success

Federal tax policies have a huge impact on how much land we’re able to protect. Tax incentives for land conservation offset part of the loss in property value when a landowner donates an easement, which makes conservation a viable option for more landowners. Tax incentives for voluntary land conservation have proven to be hugely successful, helping land trusts to protect over 50 million acres nationwide.

Federal Income Tax Benefits

One of the most significant tax incentives is the federal income tax deduction, which Congress made permanent in 2015. This powerful tool allows modest-income donors to receive greater credit for donating a very valuable conservation easement on property they own. With the enhanced incentive in place, the pace of conservation exceeds one million acres per year!

Estate Tax Benefits

Estate tax incentives are another important consideration for many landowners — especially farm and ranch families, who can be hard hit by estate taxes. In some cases, estate taxes force families to subdivide or sell their land. Estate tax incentives for conservation create an alternative, which can help to keep land intact, in production, and in the family. The Alliance helped to create the first estate tax incentives for conservation and we keep working to improve these incentives so they benefit more families and help save more land.


Again from the Land Trust Alliance Website:

Income Tax Incentives for Land Conservation

For landowners, donating a conservation easement is a way to protect places they love. It’s also a major financial decision. When landowners donate a conservation easement, they give up part of the value of their property — often their family’s biggest asset. Tax incentives offset some of that loss in property value, making conservation a viable option for more landowners.  

How to Use the Federal Conservation Tax Deduction

In 2015 Congress enacted one of the most powerful conservation measures in decades: the enhanced federal tax incentive for conservation easement donations.

The permanent conservation easement tax incentive is a powerful tool that helps Americans conserve their land voluntarily.

For land trusts across the country, the permanent incentive represents vastly increased opportunities to protect the special places in their widely varied communities.

If you own land with important natural, agricultural or historic resources, donating a conservation easement can be a prudent way to both save the land you love forever and to realize significant federal tax savings.

This short brochure (link to this: ) summarizes the conservation easement tax incentive and provides answers to some frequently asked questions (also below). For the latest information and for guidance on individual properties, please contact Pure Midway.

Frequently Asked Questions

What is a conservation easement?

A conservation easement, also called a conservation agreement, is a voluntary and legally binding agreement between a landowner and a land trust or government agency.

When a landowner donates an easement to a land trust or public agency, she or he is giving away some of the rights associated with the land. The easement permanently limits uses of the donated parcel in order to protect its conservation values, as specified in the Internal Revenue Code (IRC) 170(h).

Conservation easements offer private landowners flexibility in protecting their land. For example, a donating landowner can retain the right to grow crops on a parcel while, at the same time, relinquishing the right to build additional structures on the parcel.

The land trust is responsible for making sure that a landowner adheres to the conservation terms of the easement. An easement may apply to all or a portion of the property and may or may not allow for public access to the property. A landowner who has donated a conservation easement can sell the land or pass it on to heirs, and future owners of the property are bound by the terms of the easement.

How does the permanent, enhanced tax incentive work?

If a conservation easement is voluntarily donated to a land trust or government agency, and if it benefits the public by permanently protecting important conservation resources, it can qualify as a charitable tax deduction on the donor’s federal income tax return.

First enacted temporarily in 2006, the tax incentive was made permanent in 2015 and increases the benefits to landowners by:

  • Raising the deduction a donor can take for donating a conservation easement to 50%, from 30%, of his or her annual income;

  • Extending the carry-forward period for a donor to take a tax deduction for a conservation agreement to 15 years from 5 years; and

  • Allowing qualifying farmers and ranchers to deduct up to 100% of their income, increased from 50%.

Easements vary greatly in value. In general, the highest easement values are found on tracts of open space under high development pressure. In some jurisdictions, placing an easement on one’s land may also result in property tax savings for the landowner.

What is an example of the financial benefit that the permanent tax incentive provides a landowner?

Prior to 2015, a landowner earning $50,000 a year who donated a $1 million conservation easement could take a $15,000 deduction (30% of his or her income) for the year of the donation and for an additional five years, generating a total of $90,000 in tax deductions.

The new, permanent incentive allows that landowner to deduct $25,000 (50% of income) for the year of the donation and for each of an additional 15 years.

This would result in a total of $400,000 in deductions. If the landowner is a farmer or rancher, he or she can deduct $50,000 (100% of income) in the first year and then for each of the following 15 years, realizing a maximum of $800,000 in deductions.

Can anyone deduct more than the value of his or her gift of an easement?

One can never deduct more than the fair market value of the gift. The permanent incentive simply allows landowners to deduct more of that fair market value.

Who qualifies as a farmer or rancher?

The 2015 law defines a farmer or rancher as someone who receives more than 50% of his or her gross income from “the trade or business of farming.” The law references IRC 2032A(e)(5) to define activities that count as farming, including:

  • Cultivating the soil or raising or harvesting any agricultural or horticultural commodity (including the raising, shearing, feeding, caring for, training and management of animals) on a farm;

  • Handling, drying, packing, grading or storing on a farm any agricultural or horticultural commodity in its unmanufactured state, but only if the owner, tenant or operator of the farm regularly produces more than one-half of the commodity so treated; and

  • The planting, cultivating, caring for or cutting of trees, or the preparation (other than milling) of trees for market.

For an easement to qualify for a farmer or rancher, it must contain a restriction requiring that the land remain “available for agriculture.” This provision also applies to farmers who are organized as C corporations. Additionally, Alaska Native Corporations are eligible as farmers or ranchers.

Do these changes apply to gifts of land?

The expanded incentive does not apply to gifts of land in fee. It only applies to gifts that qualify under IRC 170(h)(2), such as conservation easements. A landowner considering the donation of land should consult an attorney to determine whether the structure of his or her gift should be changed to take advantage of the permanent incentive.

When does the permanent incentive apply?

The permanent incentive applies to all conservation easements donated after December 31, 2014.

What other restrictions apply?

Conservation easement donations must comply with “conservation purposes” as defined in IRC 170(h). A donated easement must be a true gift. It must protect significant natural, agricultural or historic resources that public agencies or land trusts want to have conserved. A donated easement cannot serve to simply prevent development on a property or be part of a “quid pro quo” agreement in exchange for a government action, such as issuance of a building permit or a zoning change.

Will donors who use this provision be audited by the IRS?

Taking advantage of the 2015 law should not affect one’s likelihood of being audited. However, all donors should note that the IRS does pay attention to donations of property that are high in value, including donations of conservation easements.

This makes it important for donors and their advisors to know and follow the law, utilize a reputable professional appraiser who has experience in the appraisal of conservation easements and donate to a reputable land trust that has adopted and implemented Land Trust Standards and Practices.

What is the role of Pure Midway?

Potential easement donors should know that donating a permanent conservation easement is a big commitment requiring careful consideration and independent legal advice.

Donating a conservation easement requires a working partnership with a land trust such as Pure Midway— and time for careful drafting of documents and maps, baseline documentation and a professional appraisal. Landowners should understand that a land trust may decline to accept a donation that does not meet both the legal requirements and the land trust’s own specific charitable mission and strategic plan. In addition, land trusts will want to see the appraisal before accepting your gift.

How do other laws affect easement donations?

A 2006 law (PL109-280) redefines who is a “qualified appraiser,” so appraisers need to show donors that they are qualified under the new law, which states that a qualified appraiser must “demonstrate verifiable education and experience in valuing the type of property subject to the appraisal.”

The 2006 law also tightened the rules for easements on “certified historic structures.” If you are protecting a property that includes such a structure, new regulations, including a filing fee and specific appraisal requirements may apply to you.

State Income Tax Credits for Conservation

In addition to the federal tax deduction, 16 states offer some form of tax credit for conservation easement donations; however Utah does not offer any form of tax credit for conservation easement donations.