Scope of Work:

Completing a conservation easement donation involves a number of specific activities leading from the first meeting with the landowner to the final recording of the document.  The process includes extensive field work by the land trust, as well as EMG, to document, inventory, and catalog the property's existing conditions and determine the status of the natural and cultural resources.  Federal regulations require that the condition of the property at the time of the easement donation be well documented.  All pertinent information is compiled into a Baseline Document Report ("BDR").  The conservation easement will ultimately be tailored to protect those resources that are depicted in the BDR, and will serve as an ecological standard for future monitoring..

The preceding information is provided as a broad overview on the subject of conservation easements and is not meant as an all inclusive statement on the complexities of conservation easements.  We are not giving legal, business, or tax advice, and prospective clients are not to construe the contents of this site as such.  You should always consult your attorney, tax or business advisor as to the legal, tax, business, and related matters concerning conservation easements. 


IRS CIRCULAR 230 NOTICE: Internal Revenue Service regulations generally provide that, for the purpose of avoiding federal tax penalties, a taxpayer may rely only on formal written advice meeting specific requirements. Any tax advice on this site does not meet those requirements. Accordingly, any such tax advice was not intended or written to be used, and it cannot be used, for the purpose of avoiding federal tax penalties that may be imposed on you or for the purpose of promoting, marketing or recommending to another party any tax-related matters.

Natural Resource Investment Consultants
What is Tax Deductible?

The donation of a conservation easement/conservation property is treated as a tax deductible charitable contribution if it meets the "qualified conservation contribution" requirements of Internal Revenue Code 170(h).  In order to qualify under these requirements, an easement must be granted in perpetuity and exclusively for at least one of the conservation purposes described below:

  • The preservation of land areas for outdoor recreation by, or the education of, the general public
  • The protection of a relatively natural habitat of fish, wildlife, or plants, or similar ecosystem
  • The preservation of open space (including farmland and forest land) where such preservation is -
    • for the scenic enjoyment of the general public, or
    • pursuant to a clearly delineated Federal, State, or local government conservation policy, and will yield a significant public benefit, or
    • the preservation of a historically important land area or a certified historic structure


The conservation easement/conservation property donation must also comply with applicable state conservation easement laws.  Codes vary by state.  Please make sure that your tax professional is knowledgeable of all current federal and state tax codes regarding conservation easements.

What is a Conservation Easement?

A conservation easement is a legally binding contract between a land owner and a land trust or land conservancy in which the land owner agrees to permanently give up, or donate, certain rights to usage of the land while still retaining ownership and control.  The most common right of usage donated in the conservation easement is future development of the land.  Most donors choose to retain the right to continue to live on the land, to farm and manage timber, enjoy recreational activities such as hunting, and to allow for a limited number of future residences for their children or future property owners.  In accepting the conservation easement, the land trust is obligated to forever ensure the provisions of the easement are upheld.

What a Conservation Easement does:
  • Restricts the uses of a property as necessary to protect its important natural, scenic, and historic features
  • Specifies the number, type, and locations of dwellings and other buildings
  • Prohibits quarrying and excavation of minerals
  • Prohibits dumping of solid and liquid waste
  • Limits the removal of trees without an approved forest management plan
  • Restricts or eliminates industrial and commercial activities, except for agriculture
What a Conservation Easement does not do (typically):.
  • Does not permit public access to the protected areas, unless specifically desired by the landowner and the conservation organization (In certain situations, public access to a portion of the property may be necessary to meet the IRS's public benefit right.)
  • Does not change the ownership of the land.  Property owners continue to use and enjoy the land consistent with the terms of the easement
  • Does not prohibit all subdivision.  The property can often be subdivided, subject to the terms of the easement agreement
  • The purpose IS to protect the natural, scenic, or historic value of the property
Appraisals:

The value of a conservation easement depends on the land and its entitlements, the surrounding area, and the extent of the restrictions placed on the land.  To determine the easement value, the land must be appraised at its fair market value both with and without the easement restrictions.  Since the conservation easement can positively affect the value of adjacent unrestricted land held by the landowner, the enhancement value of that land must also be factored in as a reduction to the conservation easement value.  Therefore, the difference between the restricted value and the unrestricted value, less any enhancement value, is the appraised value of the conservation easement.


In order to receive a tax benefit from the donation of a conservation easement, the easement must be appraised by a qualified appraiser who follows Uniform Standards of Professional Appraisal Practice (USPAP)..

Estate Tax Exclusion Information:

Internal Revenue Code Section 2031(c):

   i)  40% of land (with easement) can be excluded with a maximum of $500,000

  ii)  for eligibility under 2031(c), the easement must reduce the property by at least 30%*

            *if property is reduced less than 30% when easement is put in place, a formulaic reduction approach is used

 iii)  carry-over basis on portion of property excluded from gross estate (deductible amount) when property is sold