Conservation easements are permanent, restrictive limitations on the use of property, voluntarily determined by the landowner to suit his or her needs and set forth in a legal document. These restrictions become part of the legal title to the property and bind future owners either in perpetuity or for a specified term. Easements may generate attractive income, estate and property tax reductions. For example, an easement recorded with the Maryland Environmental Trust may exempt a property owner for state and local property taxes for 15 years.
A Bargain Sale
A bargain sale or a sale at below market value, is advantageous to landowners who are considering conserving highly appreciated land. It combines the immediate income from a sale with the tax advantages of a donation. Selling the property to a land trust at below fair market value allows the landowner to adjust the transaction to balance needs for immediate income with long term tax advantages. The reduced sale price has the added advantage of lowering heavy capital gains taxes on appreciated land.
Donated or bequeathed land becomes the property of a land trust to be conserved in accordance with the donor's wishes. Charitable remainder trusts, charitable lead trusts, life estates and other techniques are used to suit the needs of the donor. Substantial tax advantages may be available.
Limited development is sometimes the only way to protect an environmentally important property. Sensitive development of the least environmentally important part of the property is used to finance the acquisition of the remainder.