What Is My Benefit?
If your conservation easement qualifies for a tax deduction, the first thing you may wonder is how much that deduction will be.
To understand the deduction, it’s important to think about what the conservation easement does to your property. Donating some of the rights associated with that land reduces its value. The difference in value of the property before the easement was granted and after the granting is the value of the conservation easement—and the amount allowed for your deduction, plus any expenses (such as appraisal or legal fees) incurred to set up the easement agreement.
For example, let’s say your property had a fair market value of $1,000,000 when unencumbered by an easement. But your conservation easement restricted the potential for development or subdivision on the property, and now the property’s fair market value is $400,000. The value of your conservation easement is $1,000,000 - $400,000 = $600,000.
That’s why it’s very important to get a qualified appraisal of your property. You will need an accurate assessment of your property’s value before and after the conservation easement was put in place in order to claim the tax deduction that’s available to you.
How can I get more tips?
It’s simple! Enter your email below.