With a Conservation Restriction a landowner sells or donates the development rights of a specific parcel of land to a nonprofit organization or a government agency, to be held in trust. Development on that land is thereby prohibited. Some uses such as farming or timber harvesting may be allowed if specifically written into the CR. The restrictions of a CR are binding on the future owners of the property.
Example: In the case of a forest, the land might have an overall monetary value if developed “to its potential.” If not developed, the land is usually valued for less. The difference between these two valuations is the value of the development rights. The important point is “to its potential.” A parcel with very limited development potential due to wetlands will not have as great a valuation as a parcel with high ground and extensive frontage on an existing road. Usually an appraisal is done to determine the current value of the land and the value after a Conservation Restriction is applied.
Some landowners donate the CR valuation, taking a charitable deduction, while others might sell the CR valuation. In both circumstances, a CR can lower property taxes because the overall taxable value of the property has declined. Since federal and state laws change from year to year, it’s important to work with a lawyer knowledgeable in land preservation.
More About Conservation Restrictions
- A voluntary conservation agreement, also known as a conservation restriction, is a legal agreement between a landowner and a nonprofit land trust or government agency that permanently limits uses of the land in order to protect important conservation values. It allows you to continue to own and use your land and to sell it or pass it on to heirs.
- When you enter into a voluntary conservation restriction with a land trust, you give up some of the rights associated with the land. For example, you might give up the right to subdivide your land or build additional houses, while retaining the full right to grow crops or undertake forestry practices. Future owners also will be bound by the agreement’s terms. The land trust is responsible for making sure the terms of the agreement are followed.
- Voluntary conservation agreements vary widely. An agreement to protect rare wildlife habitat might prohibit any development there, for example, while one on a farm might allow continued farming and the building of additional agricultural structures. An agreement may apply to just a portion of the property, and need not require public access.
- A conservation donation requires not only a willing donor, but a qualified conservation organization to accept the donation. That organization needs to be able to show that the donation closely fits its particular charitable mission. A land trust will not accept a donation that does not fit its mission and purposes.
- A voluntary conservation agreement can help a landowner pass land on intact to the next generation. By limiting the land’s development potential, the agreement lowers its market value, which in turn lowers estate tax. Whether the agreement is donated during life or by will, it can make a critical difference in the heirs’ ability to keep the land intact.
- If a conservation agreement benefits the public by permanently protecting important conservation resources and meets other federal tax code requirements, it can qualify as a tax-deductible charitable donation. The amount of the donation is the difference between the land’s value with the agreement and its value without the agreement.
- To qualify as a charitable donation, a conservation agreement must be permanent. A landowner should get professional financial planning and legal advice before making such a major donation.
- Congress recently passed a law to enhance the tax benefits of protecting private land by donating or arranging for the bargain sale of a voluntary conservation agreement. If you are interested in this option for your land, please contact The Kestrel Trust for more information
To learn more about protecting your land with a voluntary conservation agreement, call Kestrel Land Trust at 413-549-0197 or e-mail email@example.com.
For more information, download a detailed brochure.
Download a Conservation Restrictions Land Protection Tool here.