by Charlie Hancock, CHC Board Chair
Donating, or selling, a conservation easement is not a decision to be taken lightly. By definition, a conservation easement is forever, so before considering if it may the right thing to protect your land and your legacy, let’s cover some of the basics; including costs, eligibility, tax benefits, exactly what an easement is.
in perpetuity (idiom; noun, per·pe·tu·i·ty)
Formal : for all time : forever “The land will be passed on from generation to generation in perpetuity.”
What is a conservation easement?
A conservation easement is a legal agreement that limits development and subdivision while protecting land for farming, forestry, nature, and/or recreation.
Landowners who convey an easement (either by donation or sale) continue to own and pay taxes on the land. They can use the land for farming, forestry, recreation, education and other activities that sustain the property’s resources.
Conservation easements are tied to the land, whether it is sold or remains in the family—so you can be assured that the land you cared for will be protected, even when you no longer own it.
What kind of land are we working to conserve?
VLT conserves working farms and quality farmland, woodland, wildlife habitat, and community lands for education and recreation across Vermont. CHC’s work with VLT aims to ensure permanent protection of the largest unfragmented blocks of contiguous forest in our region, lands that support a strong and sustainable local economy through stewardship, with protection of core wildlife habitat and connectivity across the entire Northern Forest.
Generally, we work with landowners who want conserve 50 acres or more. On occasion, we will conserve smaller parcels with excellent resources, unique natural features, or importance to a community.
What resources are protected, and what is allowed under a conservation easement?
Conservation easements are written to protect things like special habitat, quality farm soils, and timber resources. We also consider a landowner’s future plans, identifying appropriate sites for sugarhouses, barns, homes, or other structures.
What are the costs of donating a conservation easement?
The majority of CHC’s work with our partners at VLT is around easement donations made by members of our community. Even with a donation, there are costs towards staff time, and towards the stewardship endowment. The stewardship endowment is used to make sure conservation easements are honored for generations to come. Also, a donating landowner will be responsible for covering their own legal and appraisal expenses.
The good news? Sometimes we’re able to get funding to assist landowners with these costs. Presently, CHC has capacity in our Conservation Fund to assist donating landowners with up to $10,000 in expenses associated with a donation is our region. Interested? Contact us!
What kinds of properties are eligible for funding if a landowner wishes to sell an easement?
Most funding available for conservation is for working farms and high-quality farmland. Very large tracts of forestland are sometimes eligible for funding, as is land important to a community, such as a town forest or sledding hill.
Where does funding for conservation come from?
Funding comes from federal and state sources, including the Vermont Housing & Conservation Board, the USDA Natural Resources Conservation Service, and the federal Forest Legacy Program. We are also supported by private foundations, municipal conservation funds, and our many generous donors.
How is the sale amount determined?
The price of a conservation easement is determined by an independent appraisal that assesses 1) the value of the land before conservation and 2) the value of the land with restrictions. The difference between these two numbers is the value of the easement.
What are the income tax and estate tax benefits of donating an easement?
Landowners who donate qualified conservation easements are eligible for federal, and in some cases, state income tax deductions, which can help to offset income and capital gains taxes and reduce potential future estate taxes.
As tax rates and regulations fluctuate, and IRS criteria must be followed. It is important for landowners to work with their own tax adviser.
The value of a conservation easement (and the charitable deduction, for those donated easements) is determined by an independent appraisal. Appraisers look at the value of the land before and after conservation; the difference between these two numbers is the potential deduction.
Donors may deduct up to 50 percent of their adjusted gross income. This is deductible against federal and, in some cases, state income taxes. If the value of the gift is not used up in the first year, the unused portion may be carried forward for 15 more years. Special rules apply to the deductibility of land owned less than one year.
Donating an easement can reduce estate taxes (they apply to estates over $11.4M for one person or $22.8M for a couple). Donating an easement through your will can also reduce estate taxes. Please contact us if you are interested in learning more about this option.
Will conserving my land reduce my property taxes?
In practice, however, many listers have not adjusted the assessment of conserved properties. Some landowners choose to grieve their assessment, especially if they have an appraisal which substantiates the value of their conserved property.
If land is already enrolled in Vermont’s Use Value Appraisal Program (also known as Current Use) it is already being taxed as productive farm or forestland—usually at a rate that is lower than the municipal assessment. Many owners of conserved land stay enrolled in the program and continue to pay taxes at the use-value rate.
A conservation easement usually reduces a property’s value because it removes some landowner rights, such as the right to develop the land.
Vermont’s listers are directed to consider the impact a conservation easement has on the land’s value.
If I conserve my land do I have to let the public use it?
No. Unless a conservation easement specifies that the public has access to land, access is up to the landowner. That said, many landowners honor Vermont’s tradition of allowing neighbors to enjoy land for hiking or hunting.
Some privately owned conserved properties have trails or features that have long been enjoyed by neighbors or the public. In these cases, landowners have often included a provision in their easement to permit public use of the land.
In general, a conservation easement does not require that a landowner allow the public to access the land. However, when public financing is used to buy an easement—and there is an important recreational feature on the land, such as a river— access to that feature may be required to receive funding.
How long does it take to donate an easement?
It can take anywhere from six months to a couple of years. Title issues and family agreements are often an important variable in this estimate.
How does the Land Trust know that easements are being followed?
A very important part of our work is to check in on the land we have conserved to make sure that nothing is happening that is in violation of the easement. VLT staff regularly visit properties, walk the land, speak with landowners, review aerial data, and follow up on any concerns. Violations are rare and most are minor, but when they do occur, VLT tries to work with the landowner and/or neighbors to address them. When an easement is donated, we ask for a donation to our stewardship endowment, which is designed to fund this work for the long-term.
This article was produced with significant help from our partners at the Vermont Land Trust (VLT). VLT is the largest land trust in the State of Vermont (as well as a national leader in the Land Trust community) and holds the vast majority of easements worked on by Cold Hollow to Canada. To find out more about VLT please visit www.vlt.org.