Legal Aspects of Conservation Easements: A Primer for Transportation Agencies (2013) / Chapter Skim
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Pages 41-48
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41 APPENDIX A: IDENTIFYING THE TAX ISSUES RELATED TO CONSERVATION EASEMENTS Landowners place conservation easements on their property for a number of reasons including the desire to preserve family property in its current condition for future generations. Also, the considerable tax benefits that may result from the donation of a conservation easement provide an incentive for their use.
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From page 42... ...
42 A qualified real property interest is defined to include a "perpetual conservation restriction," 236 which in turn is defined as "a restriction granted in perpetuity on the use which may be made of real property -- including an easement or other interest in real property that under state law has attributes similar to an easement (e.g., a restrictive covenant or equitable servitude) ."237 As a result, "compliance with all of the state statutory requirements for creating an easement is essential if the easement is to qualify under federal tax law as a ‘perpetual conservation restriction.'"238 A qualified conservation contribution must be donated to a qualified organization, which must meet each of the following conditions to constitute an eligible donee: 1.
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43 3. The preservation of open space (including farmland and forest land)
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44 easement must include a written "natural resource inventory" if the donor reserves any development or use rights, allow the holder to enter the property to monitor and enforce (based, in part, on the inventory) , and require the donor to notify the holder prior to exercising any rights reserved in the easement that may impair conservation values.253 Having summarized the eligibility requirements for the federal income tax deduction, the mechanics of the deduction will now be discussed.
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45 and provides for limited carry-forward provisions.265 Arkansas, California, Colorado, Connecticut, Delaware, Georgia, Iowa, Maryland, Massachusetts, Mississippi, New Mexico, New York, North Carolina, and Virginia have provided state tax credits of their own, which are similar to South Carolina's approach in various respects, such as the reference to federal regulations for eligibility determination.266 B ESTATE TAX The federal estate tax provisions, though currently in flux, have provided two separate estate tax benefits for conservation easements.
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46 subsequent generations.273 Also, the exclusion could not be given for conservation easements whose sole conservation purpose was historic preservation.274 Finally, conservation easements that allow anything more than de minimus commercial recreational uses were disqualified for the purposes of the IRC Section 2031(c) exclusion.275 Other case-specific requirements needed to be satisfied for the purposes of the estate tax exclusion and should be evaluated on a case-by-case basis, by state.
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From page 47... ...
47 to the assessor's office's liberal implementation of the general requirement that property taxes reflect actual market value. Additionally, property tax appeals by a landowner, which are generally permitted in most states, may be another means of obtaining property tax reductions in states without an express requirement.
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