Conservation Easement Appraisal

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Mellette Forestry Group has experience with helping landowners value conservation easements, which permanently preserve the land and allow the landowner to maximize tax benefits. Conservation Easements may be donated or sold and can include almost any kind of restriction agreed to by the landowner and easement holder. Each conservation easement should specifically address the protection needs of the particular piece of land.

How is a conservation easement created?
  • A Conservation easement is created when the landowner transfers some or all rights to develop the property to a government agency or qualified conservation non-governmental organization (NGO). The government agency or conservation organization, as the owner of the easement, has the legal right to block incompatible uses of the land.  As with other property rights conservation easement may be either donated or sold.

What are the Federal Income Tax Benefits of donating a conservation easement?  
  • The Federal Income tax benefits of donating a conservation easement are similar to those of making any other tax-deductible gifts of real estate, but are subject to some unique requirements. To meet the additional criteria for the tax deduction, a permanent easement must be donated to a qualified land trust for a qualified conservation purpose, such as
  1. The preservation of land areas for outdoor recreation by, or the education of, the general public
  2. The protection of a relatively natural habitat of fish, wildlife, or plants, or similar ecosystem
  3. The preservation of open space (including farmland and forest land) where such preservation is

    a.  For the scenic enjoyment of the general public
    b.  Pursuant to a clearly delineated federal, state, or local government conservation policy, that will yield a significant public benefit

  4. The preservation of a historically important land area or a certified historic structure.
  5. A person "donating" a qualified conservation interest may deduct the appraised value of the easement from their adjusted gross income, provided that the deduction does not exceed 30% of their adjusted gross income in the year of the gift. Any excess balance of the deduction may be carried over for up to five succeeding years, subject to the same annual 30% limitation. (IRC Section 170)

The IRS has stringent requirements for Conservation Easement Appraisals. The following pdf is a list of questions to ask your appraiser to make sure he or she is aware of these guidelines.