Conservation Easement

Conservation Easement

by Richard C. Wilson & Family Offices Group Association Team

Family Office Definition: Conservation Easement

Conservation Easement definition:  A conservation easement is a restriction placed on the deed to property by property owners that wish to protect their land from development.  Sub-types of conservation easements include agricultural, forests, wetlands, floodplain, scenic views, and historical interests.  The property owner is compensated by conservation organizations or government groups that enforce the deed restriction either permanently or for multiple decades. An easement may be sold to provide cash (which can be further gifted to heirs), while retaining ownership of the land, and reducing the taxable estate by the value of the easement. (Easements are typically compensated at fair market value minus the restricted land value.)  Conservation easements also are deductible from income taxes if applied during the property owner’s lifetime.  Conservation easements also may qualify for further exclusions from the taxable estate based on the restricted value of the land (see IRS code Section 2031c).  Instead of full market value, land may be passed on to heirs at a lower restricted value.

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