What are the “Conservation Values” that qualify?

In order for a conservation easement to confer state and federal tax benefits to the landowner, it must meet theconservation purposes test as described in the Treasury Regulations.  Specifically, a conservation easement must be designed to protect one or more of the following conservation purposes:

  1. the preservation of open space, including farmland and forest land that a) provides for the scenic enjoyment of the general public, or b) is pursuant to a clearly delineated government conservation policy, provided, in each case, that such preservation will yield a significant public benefit;
  2. the protection of a relatively natural habitat of fish, wildlife, plants or similar ecosystem;
  3. the preservation of an historically important piece of land or a certified historic structure; or
  4. the preservation of land for outdoor recreation by/or education of the general public. (only if the landowner chooses to allow public access, or the easement is on a public piece of property.  Montezuma Land Conservancy does not require public access on its conservation easements, and this purpose is rarely used in conservation easements held by MLC).

Montezuma Land Conservancy applies the conservation purposes test to ensure that we accept easements only on lands with significant public value.  Approving easements with questionable conservation values would not only violate the letter and intent of the law, but could jeopardize our tax exempt status.

According to Stephen J. Small, a former IRS lawyer and a leading expert on easements, “You will probably not qualify … if there is nothing special or unusual about the land that you are protecting except that it does not have houses on it.”

An open space easement where “the terms of the easement permit a degree of intrusion or future development that would interfere with the essential scenic quality of the land…” would not qualify for a tax deduction.  For example, a proposal allowing construction of several homes in a scenic meadow visible from a public road would not qualify.

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