A conservation easement is a binding legal agreement between a landowner and a qualified entity (a local, state, or federal jurisdiction or a nonprofit organization recognized under Section 501(c)3 of the Internal Revenue Code) to ensure that lands are maintained in perpetual conservation. The easement ensures protection of the conservation values of a property while the owner retains ownership and use.
Specific property rights are typically removed or limited and conveyed to the easement holder. Rights commonly transferred include building construction, subdivision, mining and timber harvest limits. Remaining rights are retained by the property owner and typically include recreation use, use of existing buildings, and agricultural and forest uses.
Conservation easements do not require the landowner to allow public access onto their land.
Conservation easements are authorized by state statute (In Georgia, The Georgia Uniform Conservation Easement Act, OCGA §§ 44-10-1 to 8). Conservation easements are typically intended to benefit an adjacent property under common law, not one parcel of land, and the public at large.
Conservation easements must be permanent to qualify for tax benefits. Property with a conservation easement on it can be conveyed, bought, and sold, but the terms of the easement are transferred to the new owner. Conservation restrictions that are not permanent may be part of a conservation covenant, which is part of the Conservation Use Valuation Assessment (CUVA) program administered by county tax assessors’ offices.
Conservation easements require a baseline document that provides a detailed description of the condition of the land at the time of the easement. The document usually includes a land management plan developed with the assistance of the easement holder and natural resource professionals such as ecologists, wetlands biologists, and foresters.
There are 50 qualified land trusts operating in Georgia that can hold conservation easements and are recognized by the IRS under Section 501(c)3 of the Internal Revenue Code. More than 30 of these are qualified organizations under the state's Conservation Tax Credit Program.
In Georgia to receive the Georgia Tax Credit the easement holder must be an accredited land trust, state agency or municipality.
Federal, state and local governments can also hold conservation easements in Georgia.
Conservation easement holders have the right and responsibility to monitor and enforce easement terms.
The Conservation Tax Credit Act of 2006 allows land donations or conservation easements meeting state conservation purposes to qualify donors for a state income tax credit up to $250,000 for individuals or $500,000 for corporations and partnerships. Donors have 10 years to use the tax credit. The law provides for a credit on the Georgia stae income tax of 25 percent of the value donated for qualifying lands. The state tax credit for conservation lands is set to expire on December 31, 2016.
For individual landowners, if the donation of the conservation easement meets the IRS requirements, it is deductible for federal income tax purposes. Donors may deduct between 30 percent and 50 percent of their adjusted gross income (AGI) (or 100 percent for qualifying ranchers and farmers) over six to 16 years, or until the amount of the donation is used up. Contact the GLCP to determine what the current IRS deductions are for conservation easements.
Donating conservation land or a conservation easement may reduce the value of an estate, and thereby reduce or eliminate estate taxes.
Real estate tax assessments are based on the property’s value as determined by the local assessor. The assessed value of property may be reduced by a conservation easement, but may not due to varying approaches to assessment in each county and other tax abatement programs that may already be in effect. Check with your local tax assessor’s office to determine if an easement will benefit you with respect to local property taxes.
Contact the GLCP at 404-584-1000. The GLCP can answer basic questions about conservation easements and may be able to refer you to possible easement holders such as a local land trust in your area or a public agency.
Contact a tax advisor, real estate attorney, or accountant for good advice and information about the easement process and possible tax benefits of placing a conservation easement on your property.
Contact a land trust or other conservation organization that can help you begin the process of placing a conservation easement on your property.
For more information on conservation easement appraisers and appraisals, click here.