A conservation easement is a voluntary contract between a landowner and a land trust or government agency in which the owner places permanent restrictions on the future uses of some or all of their property to protect scenic, wildlife, water, or agricultural resources. The property owner still owns the land, and they can use it, sell it, or leave it to their heirs. Conservation easements also can protect rivers and streams — including drinking water downstream — when landowners choose to add these practices to their easement. A conservation easement does not grant public access unless the easement donor specifically agrees to provide for it.

Because an easement protects the land in perpetuity, all future landowners are bound to the restrictions. The easement is created in the form of a deed. This Deed of Conservation Easement is recorded in the county land records. Because it is recorded with the property deed records, future landowners are put on notice of the land protections that have been recorded.

The easement donors continue to own their property, retaining authority just as they did before the easement was recorded, subject to the restrictions in the easement. The land can be transferred, sold, and inherited as before.

The land trust or farmland protection board prepares a baseline documentation report, complete with photos and GPS readings, that establishes the condition of the property at the time of the easement and provides the basis for annual monitoring visits. The landowner has a copy of this baseline documentation report. Read more about LTEP monitoring here.

The difference between fair market value of the land before the easement is created and the value of the land after the easement represents the fair market value of the conservation easement. Easement value results from giving up the development rights. A “qualified appraisal” determines the value for payment or tax benefits.

A county Farmland Protection Board can pay for all or part of the easement value, subject to availability of funds (generated by the real estate transfer tax) and matching funds from the USDA Natural Resources Conservation Service or, if the property is in a congressionally-recognized Civil War battlefield, from the American Battlefield Protection Program.

Under the IRS code, qualified conservation easement donations to a non-profit organization can be treated as charitable gifts. If the property has been owned for more than one year, the portion of the value of the donation not paid for can be deducted against up to 50 per cent of the donor’s income, with any excess carried forward for up to fifteen years. There are also potential estate tax benefits, since donation of an easement can reduce the value of the property upon which estate taxes are calculated. Finally, West Virginia Code specifies that land under a conservation easement should be taxed as agricultural land. If the Property is not already receiving farm-use valuation, this can result in lower property taxes.

Frank and Sylvia Citizen own 100 acres, which they enjoy and do not want to see developed. The land already has one house and some outbuildings. They consider a conservation easement permitting one or two additional houses. An appraisal establishes that the difference in the value of the property when it can be developed and when it cannot is $5000 per acre, or $500,000 for the entire 100 acres. (The amount would have been less had they decided on reserving are

• They can apply to their county Farmland Protection Board. Depending on the availability of money and how their property scores as farmland under the criteria of the FPB and the USDA’s Natural Resources Conservation Service, they may be able to get all or part of the $500,000 from the FPB /NRCS.
• If they want to protect their land from future development and money from the FPB/NRCS is either not of interest or unavailable, they can still benefit from a federal tax deduction by donating an easement to the land trust and/or the FPB.

 

In either case, the land trust or the FPB prepares a baseline documentation report that documents the features of the property and establishes an area around the house where additional residential-related structures or farm outbuildings can be constructed. The couple obtains an agreement from their bank to subordinate the existing mortgage on the property to the conservation easement and negotiates the details of the conservation easement. After the easement is closed and recorded, if they have not received full payment from the FPB/NRCS, Frank and Sylvia obtain an updated appraisal to use for the tax deduction for the year in which the easement was closed, and they can carry the balance of the deduction forward to future years.

As growth in the Eastern Panhandle continues, conservation easements will be part of the future and will continue to be an important part of protecting our heritage and our quality of life and preserving the natural beauty of our landscape.