Conservation Easements

What is a conservation easement?

Download this landowner guide for a brief overview of conservation easements or read on...

A conservation easement is a voluntary agreement that allows a landowner to limit the type of development or resource use on their property while retaining private ownership of the land. When completed, the conservation easement becomes part of the property deed. A way to visualize this is to think of owning land as holding a bundle of sticks. Each stick represents the landowner's right to do something with their property--the right to build a house, subdivide the land, extract minerals, build roads, harvest timber, allow hunting, etc. A landowner may give up certain rights (sticks from the bundle) associated with their property through a conservation easement.

An agricultural and open-space conservation easement restricts land to agriculture and open space uses. The easement generally prohibits or severely limits any subdivision or development or any practice which would damage the agricultural and open space value and potential of the land.

By donating certain relinquished rights to a qualified organization (a land trust or government agency), and by meeting specific conditions, a landowner may become eligible for certain tax benefits. The organization which receives (is granted) the easement (the land trust) accepts responsibility for monitoring and enforcing the restrictions in perpetuity. Tax benefits are available only for perpetual easements that subject all future landowners to their restrictions.

Is a conservation easement the right tool for you and your family?
The following is a short list of questions to help you decide if a conservation easement is right for you, your family and your property.

  • Do you want to protect certain natural features of your property but retain private ownership?
  • Do you want to protect the conservation values of your property for future generations?
  • Do you want to protect the land from subdivision or being converted to non-agricultural uses?
  • Are estate taxes a threat to keeping your property in the family?
  • Could you benefit from significant income and estate tax deductions?
  • Do you want to leave the beauty, scenic and historical values of your land for future generations to enjoy?
  • Does your property offer significant ecological benefits to the surrounding community?

If you answered yes to any or all of the above questions, please consider looking into how a conservation easement might help you and your property. Click here for more information. Or download this landowner guide for a brief overview of conservation easements.

How does a conservation easement affect my property rights?
A landowner who participates in a conservation easement retains all rights to use the land for any purpose that does not interfere with the purpose and specified restrictions laid out in the conservation easement. The specific rights that a property owner is restricting or retaining are spelled out in each individual easement. While an easement could remove development rights, the landowner still holds the title to the property, the right to restrict public access and the right to pass the property to whomever. The property can be mortgaged, transferred or sold just as it normally would, whether it is encumbered by a timber harvest plan, a power-line right-of-way, or a conservation easement.

What are the benefits of a conservation easement?
Benefits to landowners -- donating a conservation easement to a qualified nonprofit organization can significantly reduce federal and state income taxes, local property taxes (on a county-by-county basis), and estate and inheritance taxes. The Internal Revenue Service allows a deduction if the easement is perpetual, is donated "exclusively for conservation purposes" and meets certain criteria for those conservation purposes. The amount of the tax deduction is determined by the value of the conservation easement. The value of a donated easement is deductible from federal income taxes just like a contribution to a church or charity. Estate planning on family farms and ranches may use conservation easements to promote family ownership for future generations.
In addition, profitability and economic survival are critical concerns in farming and ranching, as in any business. However, unlike other business, you work directly with the land. Through a conservation easement, a landowner can protect his property to ensure that future generations have continued opportunities to ranch, farm and practice good stewardship.

Benefits to the community -- Protecting working lands and open space through conservation easements can help maintain our region's agriculture businesses. Additionally, easements offer a way for private individuals and neighbors to work together to protect their area's scenery, agricultural heritage and rural quality of life. Public benefits include protection of land for open space, wildlife, ecological protections, responsible resource production and scenic enjoyment – all of which can be lost through unrestricted development. In addition, land placed under a conservation easement remains in private ownership, meaning the cost of managing the land with a conservation easement continues to be the responsibility of the landowner and not a public entity. This also means that the land continues to contribute to the local tax base as opposed to land transfers to public ownership where the tax base may be eroded.

How is the value of an easement determined?
Land ownership can be viewed as owning a variety of separate rights on the property. When an easement limits any of these rights, the value of the land is affected. The value of the conservation easement is the difference between the value of the land without the conservation easement restrictions and the value of the land after the restrictions have been applied and certain rights (i.e., development) removed. When the easement qualifies under IRS regulations, this amount is also generally the value of the charitable donation. The conservation easement value must be determined by a qualified appraiser.

Example: The Smith family has decided to convey an agricultural easement on its 500-acre ranch to the Northcoast Regional Land Trust. If the property's current value is $5,000 an acre, its total fair market value would be: 500 acres x $5,000 / acre = $2,500,000 (before an easement is in place).

If placing an easement on the property (and removing the non-farm development rights, protecting riparian areas etc.) lowers the per acre value to $3,000 an acre, then the total market value of the restricted property would be: 500 acres x $3,000/acre = $1,500,000.

The difference between the before and after values would be the value of the easement donation: $2,500,000 - $1,500,000 = $1,000,000.

What is the Conservation Tax Incentive?

Conservation Easement Tax Law changes periodically, please call NRLT (707-822-2242) for the most up-to-date information about tax benefits or consult with your tax adviser.

If you own land with important natural or historic resources, donating a voluntary conservation easement (also called conservation agreement) can be one of the smartest ways to conserve the land you love, while maintaining your private property rights and possibly realizing significant federal tax benefits.The following summarizes the conservation easement tax incentive and provides answers to some frequently asked questions. The incentive:

  • Raised the deduction a donor can take for donating a conservation easement from 30 percent of his or her income in any year to 50 percent.

  • Allows qualifying farmers and ranchers to deduct up to 100 percent of their income; and

  • Extends the carry-forward period for a donor to take tax deductions for a voluntary conservation agreement from 5 to 15 years.

This is a powerful tool for allowing modest-income donors to receive greater credit for donating a very valuable conservation easement on property they own. For the latest information on the conservation tax incentive, visit

How are the tax benefits of an easement calculated?

Federal income-tax benefits -- Under the current IRS code, qualified conservation easement contributions (e.g. donated conservation easements) can be treated as charitable gifts. The value of the gift can then be deducted at an amount of up to 50 percent of the donor's adjusted gross income (AGI) for non-agricultural landowners and up to 100 percent of AGI for agricultural landowners in the year of the gift. To qualify as an agricultural producer you must earn over 50% of your annual gross income from agricultural operations. If the easement's value exceeds the respective percentage of the donor's income, the excess can be carried forward and deducted (subject to the established percentage limit) in each of the fifteen succeeding tax years.

Since the Smiths receive less than 50% of their annual income from agricultural operations they do not qualify as agricultural landowners, and therefore are eligible for a 50% AGI deduction from their easement donation. The value of their easement, as figured above, is $1,000,000. If their combined income in the year of the easement transaction is $90,000, they would be able to deduct $45,000 in the first year.

Since the value of the easement is greater than their allowable deduction, the Smiths would also be able to deduct $45,000 for each of the next fifteen years (assuming a constant adjusted gross income of $90,000). Their total income-tax deduction for the sixteen-year period would be $720,000.

State income-tax benefits – Many states provide an additional deduction for easements.

Property tax benefits -- Some counties direct local tax assessors to take into account the existence of conservation easement restrictions when assessing property. If the property is not already receiving farm-use valuation (e.g. Williamson Act), this can result in lower property taxes.

Inheritance tax benefits -- The donation of an easement, whether during a landowner’s life or by bequest, can reduce the value of the property upon which estate taxes are calculated. Each year Congress sets the minimum value of the estate required for the tax to take effect. Go to: or talk to your tax consultant for more up to date information. Most farm property is also subject to state inheritance taxes. By reducing this tax burden through an easement donation, a landowner can help ensure that his or her family does not have to sell the farm just to pay taxes on it.

Can some development be allowed under an easement?
Conservation easements are flexible documents. They may be written to apply to the entire property or to only a portion. For example, if someone owns 80 acres, of which 35 acres are wetlands, the landowner may decide to restrict development only on these 35 acres. The remaining 45 acres would not be affected by the easement.

Their terms are tailored to suit the needs of the landowner and the property. While conservation easements may restrict certain uses of the land, some limited development may be allowed. For example, an easement generally permits the construction of new farm buildings and can allow construction of carefully located houses within a ‘buildable’ area defined and mapped out in the easement document. Certain significant parts on a property may remain ‘forever wild,’ where no development or alterations are permitted. The flexibility of other restrictions will vary with the characteristics of the land and the conservation objectives of the easement.

Who owns and manages easement protected land?
The landowner retains full rights to control and manage their property within the limits of the easement. The landowner continues to bear all costs and liabilities related to ownership and maintenance of the property. The organization that owns the easement will monitor the property to ensure compliance with the easement's terms, but has no other management responsibilities and exercises no direct control over other activities on the land.

Why do people grant conservation easements?
People grant conservation easements because they want to protect their property from future unwanted development and damaging land uses, while retaining ownership of their land. By granting a conservation easement, a landowner can assure that the property will be protected, regardless of who owns it in the future. An additional benefit is that the donation of an easement may provide significant financial advantages.

How long does an easement last?
An easement's duration is usually set up to last forever (the legal term is in perpetuity); certain government programs allow for ten to thirty-year easement contracts. Tax benefits, however, are only available for permanent easements. If a property is mortgaged, the owner must obtain an agreement from the lender to subordinate its interests so the easement cannot be extinguished in the event of foreclosure. An easement is legally binding on all future landowners for the agreed-upon time period. An agricultural conservation easement can, however, be modified or terminated by mutual agreement if the land or its surroundings change so that the agricultural conservation objectives of the easement can no longer be achieved.

Can an easement be modified or amended?
A conservation easement can only be changed or amended with the consent of both the property owner and the easement grantee (i.e., the land trust). A conservation easement is unlikely to be changed unless the change would support the conservation values defined in the easement. In some cases, easements placed on agricultural lands specifically to sustain production, have been removed if outside forces (adjacent land use, local laws and regulations) limit agricultural production.

What are the disadvantages of a conservation easement?
A conservation easement is not appropriate in every case. Some parcels of land are not sufficiently valuable from a conservation standpoint to justify the restrictions of an easement. A potential disadvantage for the landowner is that a conservation easement, in restricting the use of the land, may reduce the land's market value. A landowner concerned about the financial implications of a conservation easement should carefully weigh the trade-off between possibly reduced market value and potential tax advantages.

For the conservation organization (grantee), an easement means the responsibility and expense of monitoring compliance with the easement and, if necessary, enforcing the easement in court. The Northcoast Regional Land Trust will accept an easement only if it meets our objectives and only if we can fulfill the responsibilities involved. Finally, conservation easements are like partnerships between landowners and conservation organizations that need mutual trust and good communication to avoid unnecessary disputes.