and the Role of Land Trusts
A conservation easement is a legal agreement between a property owner and a "qualified conservation organization", that permanently limits use of the property in order to protect "conservation values".
A "qualified conservation organization" is a non-profit, tax exempt organization that meets certain additional IRS requirements. A land trust, such as the Bainbridge Island Land Trust, is a qualified conservation organization.
"Conservation values" are certain physical or aesthetic characteristics of the property that are: (a) within a list of characteristics defined by the IRS, the preservation of which the IRS defines as a "conservation purpose," and (b) consistent with the conservation goals of the qualified conservation organization.
Conservation easements are flexible. They can restrict or allow many combinations of uses. For example, a conservation easement might allow the current and future owner to live on the property, but might restrict the number of additional houses that can be built on the property. Or, to permanently protect a stream or forest, the conservation easement might limit building, logging or the use of certain chemicals on a portion of the property, while leaving the rest of the property unrestricted.
The advantages of a conservation easement to the environment are fairly obvious. Less obvious are the potential advantages of a conservation easement to the property owner. These potential advantages include the following:
- The donor of a conservation easement is often eligible for:
- Reduction in local property taxes
- Charitable income tax deduction in the year the gift is made
- Reduction or avoidance of capital gains taxes
- Reduction or avoidance of future gift and estate taxes
- Sale and inheritance of the property are not restricted.
- Cherished property can be protected for future generations of the owner's family.
In order to be eligible for most of the potential tax benefits, the owner must obtain and pay for a professional "before and after" appraisal of the property, demonstrating that the value of the property has been reduced as a result of the conservation easement. This reduction in value constitutes a charitable gift, and determines the amounts of federal tax benefits. This reduction in value also determines, in part, the assessed value of the property for purposes of local property taxes.
For additional general information about conservation easements and land trusts I suggest contacting either a local land trust (such as the Bainbridge Island Land Trust), or the Land Trust Alliance. See contact information, below:
Bainbridge Island Land Trust
P.O. Box 10144
Bainbridge Island, WA 98110
(Office is located in the Marge Williams Building at 221 Winslow Way)
Phone: (206) 842-1216
Fax: (206) 855-9241
Land Trust Alliance
1331 H St NW, Ste 400
Washington, DC 20005
Phone: (202) 638-4725
See especially the publications listed at: www.lta.org/publications/bkowner.htm
The Bainbridge Island Land Trust has also organized a "conservation buyer/seller program" that is summarized on their website at www.bi-landtrust.org/landtrust/conserve/buysell.htm
Please remember that this article contains only the most basic information about its subject matter. I do not intend this article to contain legal advice specific to any particular person or situation. Before entering into any agreement concerning your Property, I urge you to consult with a real estate lawyer and with your tax or estate planning advisor.