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Conservation Easements

Conservation Easements. The Basics. An easement a llows t he e xercise of rights on another’s property Property illustrated as a bundle of sticks Executed as a deed The deed describes the parameters Parties Restrictions Gained rights . The Basics.

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Conservation Easements

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  1. Conservation Easements

  2. The Basics • An easement allows the exercise of rights on another’s property • Property illustrated as a bundle of sticks • Executed as a deed • The deed describes the parameters • Parties • Restrictions • Gained rights

  3. The Basics • Most conservation easements are voluntary • But… in certain circumstances it depends on who you ask • May be gladly entered into • Donations • Tax benefits • Some may feel coerced • Thrown in as an incentive for a permit approval

  4. The Basics • The Parties • Grantor • Property owner • Grants easement to another party • Gives up certain property • Grantee • A qualified conservation organization • A Public Agency • Gains rights to enforce and monitor easement

  5. The Purpose & Benefits • Preserves status of land • In most cases, leaves land in private ownership (and continued partial use) • Can be as flexible as need be • Whole or part of parcel / lot • Restrictions can be negotiated among parties • Can be sold or donated

  6. The Benefits (to the owner) • State Conservation Tax Credits • A response to perceived federal ineffectiveness • Not all states allow such credits • Provides greater flexibility to owners regarding tax benefits (relative to federal benefits)

  7. The Benefits (to the owner) • SCTCs based on three • Calculation of tax credit value • Caps on maximum values • Number of years one may rollover the credit

  8. The Benefits (to the owner) • Calculation of credit value • Based on the decrease in market value • In NC: 25% of fair market value of donated property interest • Based on negotiation costs • Property tax value • Local tax written off of state tax liability

  9. The Benefits (to the owner) • Caps on maximum value • No limit (South Carolina) • High Limits • North Carolina ($500,000 for individuals and corporations) • Colorado ($375,000) • Low Limits • Maryland ($80,000)

  10. The Benefits (to the owner) • Carry-forward periods • Allows beneficiary of credit to use credit over a period of years • 5 years is most typical • $50,000 benefit -- $10,000 annual tax liability • Can get rid of state tax liability over a five year period

  11. Some Federal Tax Benefits • Income Tax Charitable Contribution Deductions • Based on the reduction in the land’s value after easement • Up to 50% of adjusted gross income • Up to 100% for farmers & ranchers • 16 year carry-forward period

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