Does My Conservation Easement Qualify?

There are many different kinds of easements, and not all of them offer you the possibility of tax savings.

In order to reduce your tax burden, the conservation easement must be considered a charitable donation—and the IRS has very specific rules about what counts and what doesn’t. The IRS requires your donation to have a conservation purpose, and it defines that as: 

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Credit: Shutterstock

• The preservation of land areas for outdoor recreation by, or the education of, the general public
• 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) either for the scenic enjoyment of the general public or pursuant to a clearly delineated government conservation policy
• The preservation of a historically important land area or a certified historic structure

Your easement must also be permanent—all future landowners must be bound by it—and it must be donated or sold for less than its fair market value. Depending on which conservation purposes you claim, there may be a requirement for public access to your property as well.

The organization that accepts your easement also has to meet certain requirements. It can be a public agency, a non-governmental organization, or a private charitable organization. If it’s a private charitable organization, it must be designated as tax-exempt under section 501(c)(3) of the Internal Revenue Code. And it must have the ability to enforce the easement, which means it must have the resources and manpower (a group of volunteers is enough) to make sure the easement is used as intended.

If both your conservation easement and the organization you selected for it meet the IRS requirements, you’re in luck: you qualify for an income tax deduction.