The Nature Conservancy in Wyoming - Conservation Easements: Frequently Asked Questions

The Nature Conservancy, in partnership with ranchers and the USDA’s Farm and Ranchland Protection Program (FRPP), collaborated on a conservation easement that maintains important wildlife habitat at Twin Creek Ranch.

New Tax Law
Time is running out for Wyoming landowners who want to take advantage of new tax incentives for donated conservation easements. The Pension Protection Act is set to expire on Dec. 31, 2007.

A Sunset on Tax Incentives?

Will there be a sunset on conservation opportunities for agricultural lands? If passed, the Rural Heritage Conservation Extension Act of 2007 will make the Pension Protection Act permanent.

Want more information about conservation easements?

Does every easement have to be perpetual?
For the donation to qualify for income and estate tax benefits, the conservation easement must be perpetual and apply to all future owners. Some organizations, however, may be willing to purchase conservation easements that are designed for a period of years. For example, the Wetlands Reserve Program administered by the Natural Resources Conservation Service pays landowners for limited-term conservation easements on restored or existing wetlands that provide significant habitat for birds and other wildlife.

Can easements be purchased?
Yes, but opportunities for paid conservation easements are declining as competition for scarce funding increases. A new limited-term law offsets the decline in paid easements by providing substantially increased benefits for donating an easement. In a paid as well as a donated easement, willing landowners restrict development of their land.

After selling or donating the development rights, the landowner retains all other rights of ownership, including water rights, using the land for agriculture or conserving it, preventing trespass, or selling or transferring the land to others.

Typically, private conservation organizations or government entities are the easement holders. These organizations do not acquire the right to build anything on the land, but only the right and responsibility to limit development of the property and protect its conservation values as described in the easement provisions.

Conservation easements do not require landowners to provide public access. In a purchased easement, landowners are generally paid the difference between the value of the land as restricted and its value on the open market. This is usually determined through a real estate appraisal.

Because restricting development lowers the overall land value, the easement can reduce estate taxes.

What are the benefits of donated easements?
In a donated easement, the landowner receives income and estate tax benefits commensurate with the value of the rights the landowner is giving up – in most cases, the development value. The new Pension Protection Act makes donated easements much more attractive for farmers and ranchers. In many cases, the conservation easement can be a combination of paid and donated.

A conservation easement donor could choose to limit the right to develop a property, but keep the rights to build a house, raise cattle and grow crops.

Do all donated easements qualify for an income tax deduction?
No. To qualify as a charitable contribution, each conservation easement must be perpetual and meet at least one, but not all, of these recognized purposes:

• protect relatively natural habitats of fish, wildlife or plants
• preserve open space – including farms, ranches or forests – either for scenic enjoyment or in keeping with a clearly defined public policy
• preserve land for public outdoor recreation or education
• preserve historically important land or structures