University of Florida

Conservation Easements

Tax Incentive Enhances Benefits

What Is a Conservation Easement?

A conservation easement is a legal agreement to limit the amount of development on a property. This agreement is made between a landowner and a land trust, government agency, or other entity that maintains agricultural and/or natural-use land to protect the owner's agricultural and/or conservation interests. Private landowners may wish to consider donating or selling some of these rights. These decisions may be economic, personal, or both.

Conservation easements offer great flexibility. Each easement is unique and typically customized in consultations between the landowner and the partner organization. It is a legal agreement designed to consider the landowner's needs and the conservation objectives. For example, conservation easements may be designed to allow continued farming or ranching activities, hunting, and other recreational uses.

An easement may apply to an entire property or to a portion of the property. In most cases, conservation easements are perpetual, so land use restrictions remain if the land is sold or passed on to heirs. Future development rights are typically restricted and are recorded on the deed.

Conservation easement programs are developed and run by federal, state, and local governmental agencies as well as non-governmental organizations (NGOs). Although all conservation easements are essentially similar in principle, the priorities of different organizations may vary depending upon their missions.

The priorities of the partner organization will influence the type and degree of land use restrictions required in the easement. For example, some organizations may focus on the protection of large natural areas, while the other groups may be concerned with maintaining agricultural lands currently in production.

The New Tax Incentive

Congress recently passed a new law to enhance the tax benefits of donating a voluntary conservation agreement. This donation can be one of the smartest ways to conserve important natural, historic, or agricultural resources and protect America’s natural heritage. Landowners will maintain their private property rights and potentially realize significant federal tax benefits at the same time.

These new incentives make it easier for average Americans--including working family farmers and ranchers--to donate land. The legislation:

  • Raises the maximum deduction donors may take from 30% of their income in any year to 50%,
  • Enables qualifying farmers and ranchers to deduct up to 100% of their adjusted gross income, and
  • Allows donors to take deductions for their contribution for a maximum of sixteen years.

These changes allow many modest-income landowners to deduct much more than they could under the old rules, bringing increased fairness to the tax code. Part of the law also tightens appraisal standards, which had sometimes been abused by landowners collaborating with appraisers to unfairly increase their deductions.

The Land Trust Alliance (LTA)--a national organization that promotes voluntary private land conservation--is providing updates on the new law at their website. Landowners should always get personalized legal and accounting advice before making land conservation decisions.