Tax and Property Value Effects of Conservation Easements

A variety of tax incentives encourage property owners to place conservation easements on their property. This paper calculates sample tax effects for a range of tax incentives and shows that many easements can qualify for subsidies that more than pay for the value of the easement, taking into account appropriate tax rates and converting into present value. Future growth in property values will increase the deferred tax savings; in some cases the aggregate savings may be as much as twice the original value of the donation. The common use of deductions strongly favors donations by property owners with substantial tax liabilities, while property owners with low tax liabilities, who may have property with equal or greater conservation values, often have much less incentive to donate easements. The existence of such substantial tax incentives make it more important that the public benefit created by easements be carefully assessed.