Conservation Easement

What is a conservation easement?

A conservation easement is a legal agreement between a landowner and a land trust which restricts the future uses of the landowner’s property, and binds all future owners of the property. A conservation easement often specifies such things as the amount of subdivision that is allowed on a property or the number of houses that may be built. It does not grant public access to a property unless the landowner specifically wishes to allow it. Conservation easements are tailored to fit a landowner’s individual situation, and the terms of the easement are arrived at only after detailed discussions between the landowner and the land trust. A landowner may choose to have his or her easement held jointly by two land trusts, such at Maryland Environmental Trust and a local land trust, like the Howard County Conservancy.

Tax Incentives for 2008-2009

The farm bill was recently passed by the Senate after a presidential veto. The Farm Bill offers increased incentives to landowners that donate a conservation easement. These incentives include raising a donor’s deduction for the conservation easement from 30% to 50% of his or her income in any one year; allows qualifying farmers and ranchers to deduct up to 100% of income; and expands the carry forward period on the tax deduction from 5 years to 15 years. The entire easement process can take anywhere from 3-6 months.

Easement Donation Process

Interested landowners in Howard County should contact the Howard County Conservancy, your local land trust. The Conservancy will schedule an initial site visit to your property to collect information and determine the potential conservation values of your property. You, the landowner, will contact an appraiser to determine the development potential of your parcel (this is where the potential value of your tax deduction will be determined). And if all parties agree to move forward, landowner and land trust will work together to form an easement document that satisfies all parties. We recommend each landowner seek legal counsel during this process. For more information please contact Tabby Fique, Easement Coordinator at the Howard County Conservancy 410-465-8877 ext. 102 or tabby.fique@hcconservancy.org

Facts at a Glance

  1. An easement is a voluntary, written deed agreement to protect conservation features of property, for example farmland, natural resources, scenic views, or historic features
  2. Easements prohibit more intensive land uses – commercial, industrial, high-density residential development. Terms of the easement may be modified to meet landowner objectives. Agricultural and natural uses encouraged; limited future home sites may be reserved.
  3. Owner retains all rights of ownership, privacy and uses within the terms of the easement; no public access is required
  4. An easement runs with the property, in perpetuity
  5. Tax Advantages - State Income Tax – if easement co-held with Maryland Environmental Trust or Maryland Agricultural Land Preservation Foundation – a state income tax credit of up to $5,000 a year for up to 16 years for a total potential credit of $80,000
  6. Tax Advantages – Federal – Congress has just passed an increase in the deduction a landowner can take for a conservation easement. The deduction has been raised to 50% of their income in year and the number of years over which a donor can take those deductions has increased to 16 years. Eligible farmers may receive a 100% deduction. These deductions were approved for 2006-07 and 2008-09 and are expected to be renewed in 2010.
  7. A Howard County grant allows reimbursement for appraisal and legal costs of easements.
  8. Property Tax – if easement co-held with Maryland Environmental Trust – 100% property tax exemption on unimproved land for 15 years
  9. Estate Taxes – Land without easement may have a high estate tax obligation – with an easement, lower taxes based on preserved farmland values, not high development values. Federal law allows additional estate tax relief for donated easements
  10. Easement Value is determined by professional appraisal – difference between value of property before and after easement. Cost of appraisal is deductible.
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