The donation of a qualifying conservation easement that protects natural and/or historic land can potentially have significant tax benefits for landowners. Conservation easements are recognized for legal and tax purposes by the State of Texas (Chapter 183, Texas Natural Resources Code) and the Internal Revenue Service (Internal Revenue Code, Section 170(h)). Conservation easements may not be suitable for every situation; it is important that landowners consult tax and legal professionals for more specific information and discuss the implications of a conservation easement with family members.
A conservation easement donation can qualify as a charitable contribution if:
It is granted in perpetuity;
It is granted to a qualified organization, either:
A nonprofit, 501(c)(3) charitable organization (i.e., a land trust) with a conservation purpose and the means to enforce the conservation easement, or
A local, state or federal governmental entity empowered to hold real property interests;
It achieves at least one of the following conservation purposes:
Preserves land for public outdoor recreation or education,
Protects relatively natural habitats of fish, wildlife, or plants,
Preserves open space, either for scenic enjoyment or in keeping with a clearly delineated public policy (such as a local open space plan), or
Preserves historically important land or certified historic structures.
Following the gift, the land trust must provide the landowner a letter of substantiation documenting the charitable gift.
If these requirements are met, the tax benefits will be based on the value of the conservation easement. This is determined with a qualified appraisal as the difference between the value of the property with a conservation easement placed on it, and without one. For a more detailed explanation that includes examples, check out the Texas Land Trust Council’s
Programs do exist that can provide local, state, or federal funding to purchase conservation easements or development rights in certain circumstances and locations. Contact us or visit our