Conservation Easements

A voluntary conservation agreement between an island landowner and the San Juan Preservation Trust, known as a “conservation easement,” can allow you to permanently conserve your property without having to sell it. You continue to own and enjoy your property, or you can sell it or leave it to your heirs. As you and all future owners will be subject to the terms of the conservation easement, you can be assured that the important natural values on your land will remain protected in perpetuity.

With this approach, you can use your property, sell it, or pass it along to your heirs. With a conservation easement, you place restrictions on how your land is used, both now and in the future. You then donate (or sell) that easement to a conservation organization such as the San Juan Preservation Trust, which agrees to enforce the restrictions forever.

A conservation easement is a voluntary written agreement between the landowner and the Preservation Trust which specifically identifies and protects the special natural features of the property, such as wildlife habitats, scenic vistas, agricultural land, natural shoreline, vital wetlands, native forests, etc.  The landowner then donates (or sells) the conservation easement to an IRS-qualified conservation organization (such as the San Juan Preservation Trust), which agrees, in return, to perpetually enforce the restrictions in the easement. The restrictions set forth in the document run forever with the title, and the property remains in private ownership.

The San Juan Preservation Trust has negotiated and received hundreds of conservation easement donations throughout the San Juan Islands. These easements have permanently protected productive farmland, forests, wildlife habitats, natural shoreline, and beloved undeveloped views, ridgelines and open spaces. The Preservation Trust does not actually own these lands; however, it has assumed the long-term responsibility to ensure that the conservation easement’s restrictions on the land are observed.

Unless specifically requested by a landowner, a conservation easement does not create a right for public access to a property.

How Conservation Easements Work

The goal of the conservation easement is to protect the natural conservation values of the land. The exact terms of the easement are discussed and agreed upon by the landowner and the San Juan Preservation Trust. The easement is donated (or, in rare cases, sold) to the Preservation Trust, which has the authority and legal obligation to enforce its terms in perpetuity. The landowner still owns the property and can use it, sell it, or leave it to heirs, but the restrictions stay with the land forever.

In many cases, a landowner may wish to completely eliminate the ability to develop a property, thereby ensuring that the property will remain in its natural state in perpetuity. More often, a landowner will reduce—but not eliminate—the number of home sites currently allowed on a property by local zoning. In most cases, the “market value” of the land (the price for which it could be sold on the open market) will be significantly reduced with a conservation easement. This reduction in value, coupled with the benefits of the scenic and wildlife resources protected by the conservation easement, may qualify the easement as a charitable gift for tax purposes.

1. Establishing Value

While our conservation easement donors are motivated by a desire to maintain the magic of their land and contribute to the natural integrity of our islands, they are often forfeiting significant value to the public good and are entitled to receive the maximum tax benefits allowed by law.

To establish the value of a conservation easement, the value of the restrictions must be determined. To do this, an appraiser determines what the property is worth (its market value) without the conservation easement restrictions, and then determines the value of the property after it is restricted by the easement. The difference in value is the amount of the gift. As the conservation easement has been donated to a qualified conservation organization (the San Juan Preservation Trust), this is considered to be a charitable gift.

EXAMPLE: A property is appraised at $500,000 before any conservation easement restrictions are in place. The same property is then appraised at $300,000 after the conservation easement is in effect.  The value of the conservation easement is, therefore, $200,000.

Generally, the value of the donation is greater when the easement is more restrictive, as more rights to use the property have been given away.  In the San Juan Islands, these values have ranged widely; there is no trusted formula for anticipating this value. Appraising a conservation easement can be a complicated process, especially in changing real estate markets, so the donor should select an appraiser who is familiar with this type of transaction. The San Juan Preservation Trust maintains a list of qualified conservation easement appraisers for this purpose.

It is important to note that the Preservation Trust cannot be directly involved in determining the value of a conservation easement for tax purposes. We provide guidance for a landowner throughout the process, confirm to the IRS that an easement has been donated and accepted by the Trust, and we commit to perpetual oversight of the easement. The landowner is responsible for obtaining a qualified appraisal, as well as for her/his own legal and tax advice.

2. Deductibility

The San Juan Preservation Trust is a nonprofit, tax-exempt corporation under section 501(c)3 of the Internal Revenue Code that is qualified to receive conservation gifts. When a conservation easement donation qualifies under IRS rules, the value of this gift may be deducted from the donor’s adjusted gross income as a charitable contribution, thereby reducing his or her taxable income.

In addition to federal taxes, other taxes may also be reduced by gifts of conservation easements. These could include estate taxes, property taxes and state income taxes (where applicable). Every conservation donor should consult with his/her tax advisor about the tax implications of a conservation easement gift.

For more information about the tax implications of private land conservation, click here.

All inquiries to the San Juan Preservation Trust are confidential and without obligation.