What is a Conservation Easement?

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What is a Conservation Easement?

Conservation Easements are individually tailored agreements through which landowners voluntarily limit the use of their property to permanently preserve its natural or scenic features. These features – called conservation values – might include significant wildlife and plant habitat, lake or river shoreline and associated wetlands, recreational trails, or important scenic or cultural lands which benefit the public.


Conservation easements (CE’s) allow landowners to continue to own, enjoy and use their land. CE’s also allow landowners to pass their land on to their heirs, or to sell their land.


Conservation easements offer great flexibility. An easement on property containing rare or important wildlife habitat might prohibit any development, for example, while an easement on a ranch might allow continued ranching and the addition of agricultural structures. An easement may apply to all or a portion of the property, and need not require public access.


In order to protect these conservation values, certain restrictions on use of the property and the reserved rights of the landowner are detailed in the conservation easement, which is a legal, recorded document. Conservation easements are perpetual; they apply to the current owner and all future landowners, permanently protecting the property.


The land trust is responsible for making sure the easement’s terms are followed. This is managed through the land trust’s stewardship program.

What are the tax benefits associated with land protection?

Easements that are (1) perpetual, (2) donated by the landowner or a qualified bargain sale, and (3) provide one or more conservation values for public benefit typically qualify for tax benefits offered by the federal government and the State of Colorado. Landowners are strongly encouraged to consult with a financial advisor and an attorney to fully understand the tax and legal implications.


To qualify for a deduction, the easement must be properly structured and must provide significant benefit to the public by satisfying one or more recognized conservation purposes as defined by Internal Revenue Code Section 170(H). These are:
 the protection of a relatively natural habitat of fish, wildlife, or plants, or similar ecosystem;
 the preservation of open space (including farmland and forest land) where such preservation is for the scenic enjoyment of the general public or pursuant to clearly delineated federal, state or local government conservation policy and will yield a significant public benefit;
 the preservation of land areas for outdoor recreation by, or the education of, the general public; and
 the preservation of an historically important land area or a certified historic structure.


A landowner might sell a conservation easement, but more often the conservation easement is donated to a land trust. The two main tax benefits associated with a donated conservation easement are income tax benefits and estate tax benefits. To determine the extent of the tax benefits, an independent appraisal must be prepared, by a qualified appraiser, and the Internal Revenue Service has very specific rules. The value and type of tax benefits depends on a variety of factors, including but not limited to the value of the conservation easement, the landowners income level and the total amount of the estate.


The value of each conservation easement can vary greatly. In general, the highest easement values result from very restrictive conservation easements on tracts of developable open space under intense development pressure. Additionally, property tax savings may result from placing a conservation easement on one’s property.


A conservation easement can be a critically important tool for passing undeveloped land on to one’s heirs. Whether the easement is donated during life or by will, it can make a significant difference in an heirs’ ability to keep the land intact. By removing the land’s development potential, the easement typically lowers the property’s market value, which in turn lowers potential estate tax.


This information courtesy of Ann Johnston, Executive Director, Crested Butte Land Trust at 970.349.1206.

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