Each property is unique; therefore each conservation easement is unique. The landowner does not relinquish ownership of the property encumbered by an easement. Rather he/she gives up certain rights, primarily the right to subdivide and/or develop the property. The right to continue agricultural production or timber harvesting is not impaired. Such activity is undertaken in accordance with the protection of the property’s natural resources and wildlife habitat. Additionally, the landowner is not obligated to provide access to the general public. The types of reserved rights can be exemplified as follows: Mr. Smith owns a 2,000-acre ranch. He wants to donate a conservation easement but has certain needs for his family and ranch business. Mr. Smith donates an easement that prohibits future development, but he reserved the right to subdivide two lots, one for each child on a specified portion of the ranch, and to build additional feeding structures and storage buildings for the ranching operation. He also reserves the right for himself and family to hunt and fish on the property. Mr. Smith has protected his land but also reserved the rights necessary to continue his ranching operation and to pass it on to his children.
Federal Income Tax Deductions – Conservation Easements are regulated by the IRS Code, Section 170(h). This section stipulates that the donation of the conservation easement must be made to a “qualified conservation organization” and if worth more than $5,000.00 documented by a qualified appraisal. The maximum charitable deduction is set by federal tax law at a percentage of the landowner’s annual adjusted gross income. Generally the landowner may deduct up to 30% of this adjusted gross income in one year. The excess value of such a gift may be carried forward for five additional tax years. After that time, any unused remainder will be lost.
State Income tax deductions – Some states have legislation that enables the landowner to receive state income tax deductions upon the donation of a conservation easement. Thus far none of the southeastern states have any such legislation.
Property tax benefits – Property taxes are based on the assessed value of the property, which is usually for its highest and best use. A reduction in the fair market value of the property due to the easement restrictions may mean that a corresponding reduction in property tax value is due.
If your property is located in the Mississippi Alluvial Valley, you are welcome to call Jimmy Emfinger, the Manager of Land Protection at the Southern Regional Office, (601)206-5434. He will be very happy to discuss conservation easements as well as other private lands initiatives that might be conducive to the property in question.
Article Published in Tree Talk (Official Publication of the Mississippi Forestry Association, Inc.) Fall 2001
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