Conservation Potential – What It Means For The Land Investor – The Country Connection

Conservation Potential – What It Means For The Land Investor

As an investor in rural land, you can reap many attractive benefits from setting up a conservation easement. This is also known as a conservation restriction or conservation agreement.  Purchasing land for conservation has become increasingly popular. So, you should be able to find an organization in your area that administers such easements.

Simply stated, a conservation easement allows you to establish a balance between the current use of your property and your desire for iron-clad, long-term protection against future development that would have a negative impact upon its natural value, such as:

  • surface mining
  • toxic waste dumping
  • being subdivided for residential or commercial construction

It can be established for either your entire acreage or just smaller areas.

The restrictions remain in effect even if the property is sold or inherited, and many owners see the competitive advantages of using conservation potential to sell land.

Of course, you retain full ownership of the land, as well as, the right to decide what activities will be allowed on it.  And your ability to sell the property or pass it on to your heirs remains intact.  Terms are tailored to meet your needs and established in coordination with the land trust that will hold the conservation easement.

As part of the agreement, you may be expected to take actions that help to ensure that conservation objectives are met, such as fencing off certain areas to keep them free from livestock or changing your farming or harvesting methods to avoid impact on streams, habitat, or soil quality.

Protecting all or part of your land for conservation purposes can result in considerable savings.

By limiting future development, you’ll be lowering the market value and thereby significantly reducing your property tax.  Estate taxes will also be lower, so your heirs will likely be more able to keep the land intact instead of dividing it into parcels to pay the bills.  In some cases, your conservation easement may qualify as a charitable donation by both state and federal tax authorities, in the sense that you’re relinquishing the market value of the development rights.

The IRS requires that the conservation potential meet at least one of the following criteria: preservation of land for outdoor recreation or education of the general public; preservation of natural habitat for fish, wildlife, or plants; preservation of open space, including farmland or forest; or preservation of a historically significant structure or land area.

It’s important to be absolutely certain that you want the restrictions you establish to apply forever.

If you think a conservation agreement of some kind might work for you, start your research by contacting local organizations to find the right easement holder – one that shares your goals and has the capacity and stability to monitor the land and enforce your easement over the long term.  You’ll also need to discuss your plans with family members.  And of course, always consult competent and experienced legal and tax professionals to determine if it’s the right move for you to make.