Landowners who want to ensure that their land will be farmed for generations to come can consider a conservation easement to limit its future development even if they later sell the land.
A conservation easement is a voluntary agreement between a landowner and a land trust—a private, nonprofit organization that works to conserve the land. The landowner "gifts" the easement to the land trust and then benefits from federal income tax deductions.
"Granting a conservation easement means the development rights for the land have been transferred, by a deed, to an organization qualified under Section 501(c)(3) of the Internal Revenue Code, such as a land trust," says Gerry Harrison, Purdue Extension ag economist. "The organization holding the easement has the responsibility to see that the land is not developed for anything other than the landowner’s retained purposes."
The landowners can reserve the right to build a house or farm facilities, and, Harrison says, they should be careful and consider those options before entering the legally binding contract.
The conservation easement remains in effect even if the land is later sold, giving assurance that the land will be used as the owner had intended.
Check with your local tax specialist to see if changes in laws in 2012 affect conservation easements.
- January 2012