Community Agriculture Alliance: Conservation easements
July 29, 2007
Steamboat Springs — Conservation easements are one of the most effective tools available for the conservation of private lands. Landowners, community programs and land trusts have protected more than 1.2 million acres of land in Colorado using conservation easements.
A conservation easement is a restriction placed on a piece of property to protect its ecological or open space values. It is a voluntary, legally binding agreement that limits certain types of uses or prevents development from taking place now and in the future. In a conservation easement, a landowner voluntarily agrees to donate or sell certain rights associated with his or her property, such as the right to subdivide, and a private organization or public agency agrees to hold the landowner’s promise not to exercise those rights.
Conservation easements can help keep land in private hands and preserve traditional land uses. Private property subject to a conservation easement remains privately owned, and landowners often continue to live on the property. Conservation easements are individually tailored to protect targeted conservation values and to meet the landowner’s needs. Many types of private land use, such as farming, ranching and timber harvesting, can continue under the terms of an easement. The easement may require the landowner to take certain actions to protect land and water resources, such as fencing a stream to manage livestock access.
Significant tax benefits are available to landowners who donate conservation easements. Colorado’s conservation easement tax credit program provides financial incentives to landowners who donate a conservation easement to a qualified organization such as a land trust or government agency. Qualified landowners may claim state tax credits for 50 percent of the fair market value of the easement, up to a maximum of $375,000. The landowner may carry the tax credit forward for 20 years and apply it to his or her Colorado income tax obligations. Alternatively, conservation tax credits also are transferable and may be sold for cash to a third party. Sellers generally receive approximately 80 to 85 percent of the face value of the credit.
An easement may also lower property taxes on the land. The market values land based on its “highest and best use,” which often means development. If a property’s development rights are forfeited through a conservation easement, then the land’s development potential no longer exists and the land’s value may be lowered, which in turn lowers the landowner’s property taxes.
In addition, the federal government also provides significant income tax deductions and estate tax benefits for landowners who donate conservation easements.
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Conservation easements benefit people and nature by protecting land for future generations. Most conservation easements remain with the property, even if it is sold or passed on to heirs. Current and future landowners are bound to the easement’s restrictions in perpetuity. Landowners place conservation easements on their property because they want to protect it beyond their lifetimes. Easements help them fulfill their vision for the future of their lands and waters. Through conservation easements, landowners can more easily pass on land to their children and grandchildren. By removing the land’s development potential, an easement can result in lowered estate taxes. Such a tax reduction, combined with the federal estate tax benefits for conservation easements, can make a critical difference in the ability of heirs to keep the land intact; the alternative has often been subdividing the land to pay heavy estate taxes.
Conservation easements benefit the public and the environment by conserving watersheds and aquifers, helping to ensure a clean supply of water for public use. Easement lands help protect migratory corridors for wide-ranging animals such as elk and bears. Conservation easements protect open space and enhance the quality of life in rapidly growing urban and suburban areas. Easements preserve agricultural lands, from family farms to ranches to timberlands, and easement lands on which use is restricted to agriculture often generate more in local revenues than they require in community services.
Want to know more? The Nature Conservancy is partnering with other conservation organizations and community leaders to hold a workshop on conservation easements in the North Park area. The workshop will be free and open to the public. The date and location will be announced in future local publications. For more information about conservation easements, contact the Colorado chapter of The Nature Conservancy at (303) 444-2950 or visit us on the web at http://www.nature.org/colorado.