BENEFITS OF DONATING A CONSERVATION EASEMENT

Donating a conservation easement holds many benefits for the landowner, financial and otherwise. Usually, the driving force behind a conservation easement is the landowner’s love of the land and the desire to protect it from development. However, a conservation easement can be a valuable component of an estate plan due to the financial benefits listed below.

FINANCIAL BENEFITS

Photo by Larry Grove

Lowers Your Property Taxes

As long as the county grants use-value (“land use”) taxation of real estate, state law requires that the county assess easement land at use value. If you were not already in use-value taxation, you save on taxes every year for as long as you own the land. If you sell your land, the tax advantage is passed on to the new owner.

Federal Income-Tax Deduction

The appraised value of a conservation easement that meets the requirements of the federal tax code is considered a deductible charitable donation. The potential income-tax deduction can be up to 50 percent of your adjusted gross income in the year the easement is given. Farmers may be able to deduct 100%.  Any remaining deduction can be carried forward over 15 additional years. You will need an appraisal of the property to claim this deduction.

Photo by Tom Murray

State Income-Tax Credit

The Commonwealth of Virginia allows a state income-tax credit of up to 40 percent of the value of the conservation easement. If not used up in the first year, this credit can be carried forward over 10 additional years. Virginia law allows easement donors to sell or transfer state tax credits that they cannot use.

Estate-Tax Benefits

Your estate taxes may run as high as 55 percent of the value of your land. Many heirs cannot afford to pay this tax. A conservation easement is considered to reduce the taxable value of your land. In addition, under the American Farm and Ranch Protection Act, heirs can exclude up to 40 percent (up to $500,000—whichever is less) of the value of the easement-protected land. The impact on the land value can speed up the process of gifting the farm to the next generation, thereby avoiding estate taxes altogether.

COMMUNITY BENEFITS

Helps Preserve the County’s Character

Easements protect the land you love forever, preserving family farms, wildlife habitat, streams, woodlands, and our scenic vistas. Easements make a difference in our community by keeping the landscape of Rappahannock County in open space. An easement donation often motivates neighbors to do the same, thereby protecting larger portions of the county from development.

Protects Flora, Fauna, & Water Quality

Photo by Richard Lykes

Easements protect the natural habitat of plants and animals and help maintain the ecological diversity of our open spaces. Trees and other vegetation filter pollutants, reduce erosion, maintain cooler water temperatures, and enhance the environmental balance in the county.

Helps the Public School System

A conservation easement locks in a lower value for the land in the eyes of the Commonwealth of Virginia, which results in higher state funding for our schools.

Keeps Taxes Low

Land that is forested or in open space requires less in services than the taxes it pays. If the land is converted to houses, the county spends more in services to the residents of those houses than the taxes they pay.