Conservation Easements

Nelson County landowners can protect their property from development by putting a restriction on their deed, known as a “conservation easement,” that permanently prohibits or limits development. The specifics of the easement are up to you. You restrict your right (and the right of any future owner) to develop the land, but you retain most other rights. You can continue to live on the land, farm it, sell the property, give the property away, or leave the property to your children.

By creating an easement and donating it to a charitable organization, you are considered to have made a gift and can take a charitable deduction on your federal and state income taxes. Since you are reducing the value of your property, the value of your taxable estate also drops, your estate tax drops, and your property tax might also be lowered.

An appraiser you hire determines the value of the donation. Appraising the property first without the easement, the appraiser then determines the value of the property after the easement. The difference between the before and after values is the value of your donation—the easement. Typically, appraisers in Nelson County find that easements reduce property values between 15% and 40%, depending on the property and the number of development rights retained.

As with any gift, you can deduct the value of the easement from your federal income taxes, up to 30% of your adjusted gross income for the year. If you cannot deduct the full value of the easement in the year you gave the gift, you can carry forward the deduction for another five years. And in 2000, a new state income tax credit allows landowners that donate easements on or after January 1, 2000 to offset income taxes owed to the Commonwealth of Virginia on a dollar-per-dollar basis, up to 50% of the value of the easement. There is a cap of $50,000 on the credit landowners can claim in 2000 and any unused portion of the credit can be carried forward for five years.

Conservation easements can also make it less expensive for your children to inherit family property. Thanks to the 1997 Taxpayer Relief Act, up to 40% of the value of land under conservation easement may be excluded from the federal estate tax. When this is added to the federal income tax deduction and the state tax credit, many landowners will fully offset the loss in value to their property from donating an easement.

We encourage people to think of conservation easements not in terms of what they are giving up, but in terms of what they’re getting. And although there are lots of good reasons to consider a conservation easement on your property, Rural Nelson strongly urges you to put the most important reason, conserving the beauty and natural resources of Nelson County, at the top of your list.

The step-by-step sheet will help you in getting your conservation easement started. We are delighted you are considering an easement and suggest you call the Virginia Outdoors Foundation at 804.293.3423 or the Piedmont Environmental Council at 540.347.2334 at any time. Although the process is neither complicated nor time-consuming, special situations can arise where experience can be helpful. They can also give you more information on the tax deductions and exclusion.