Conservation Easements: A Legacy of Land

What is a conservation easement?

A conservation easement is a way you can protect the environmental value of your land while continuing to own it. It is a legal agreement between a landowner and a nonprofit conservation group or public agency that limits use of the land to ensure that the owner’s conservation goals for the property are upheld.

A conservation easement can guarantee that the trees on your land won’t be cut down, for instance, or that the property will remain farmland.

Even if you sell your land or pass it on to your heirs, a conservation easement will protect it from losing the natural character that makes it so special.

Each conservation easement is a unique document that reflects the values that the individual landowner wishes to preserve. The role of the Foundation is to ensure that those values are preserved forever. This is done through annual monitoring and a careful documentation process to ensure that all future landowners honor the values described in the conservation easement.

What are the Benefits of a Conservation Easement?

Personal Satisfaction. Knowing that the beauty of your land will be intact for future generations and that your property will continue to promote a healthy environment.

Ownership Retention. When you grant a conservation easement on your property, you remain the landowner.

Flexibility. Conservation easements are designed to meet the needs and wishes of the landowners who grant them, while serving the public good by preserving natural resources. If you want to allow public access – or limit it – you can do so, depending on the type of easement you grant. If you want to continue to live in your home or use other structures on the property, the easement can accommodate. Perhaps you want to add a building or allow limited development; this can also be written into the agreement.

Income Tax Deduction. The Internal Revenue Service allows for conservation easements to qualify as tax-deductible charitable gifts, provided they meet certain conservation criteria. The value of the gift is the difference between the land’s value with a conservation easement and its value without the easement.

Estate Tax Reduction. You can protect your heirs from facing exorbitant estate taxes – and possibly the need to sell your land to pay those taxes – by granting a conservation easement. Since estate taxes are based on the fair market value of a property, and an easement restricting development generally lowers the fair market value, your heirs will pay less estate taxes. You can even grant a conservation easement in your will, with the same results.

In addition to having a lower appraised value (which may reduce the amount of estate tax due), a property with portions in a conservation easement may qualify for another significant tax benefit: the “Section 2031 exclusion”, enacted in 1997. Basically, a property with a conservation easement is appraised at a lower value. If the owner dies, 40% of the remaining value of the property is excluded from the estate tax calculations, with a cap at $500,000. The “2031 exclusion” alone represents a potential tax savings of hundreds of thousands of dollars for qualified property owners. Property Tax Reduction. When you grant a qualified conservation easement in Illinois, you can receive a 75 percent reduction in the assessed valuation of your property. To qualify, your land must meet at least one of the following criteria:

These are similar to the IRS’s criteria qualifying conservation easements as charitable contributions. See Internal Revenue Code Section 170 (h) for details.

For information about applying for a property tax reduction, call the Illinois Department of Natural Resources, Division of Natural Heritage at 217/785-8693.

For a brochure on Conservtion Easements: A Legacy of Land, call Fox Valley Land Foundation at 847-888-1897.