Q. What can you tell me about acquiring an easement on my property? Are there tax benefits, and who should I contact?

A. Barbara McRae, an individual who wears many hats in the Franklin area, has kindly given me permission to use an article she wrote on easements in a very early issue of Our Watershed News, the quarterly newsletter of the LTWA. Hopefully, you will find it informative. If you need more specific information, contact the Land Trust for the Little Tennessee at 828.524.2711. Here is what Barbara wrote:

Is there a way to retain ownership of your land, realize a financial benefit from it and protect the interest of your heirs, while insuring that your property’s unique natural or historical values are preserved for future generations?

Although it sounds too good to be true, the answer for some landowners is yes! A conservation easement can help a landowner accomplish all four of these goals.

Conservation easements are flexible tools that serve the interests of private property owners and the public good. Such easements are protection arrangements in which owners donate certain interests in their land to a nonprofit organization in exchange for tax benefits.

A conservation easement does not remove land from private ownership. Usually, existing uses of the land, such as farming, are not affected. What the owner typically gives up is the right to develop the property (or part of the property) in certain ways.

An easement will reduce the value of the property because it restricts development. The difference in appraised value with and without the easement determines the value of the easement donation. Financial benefits for landowners may include income tax deductions, reduction of estate taxes, and reduction of local property taxes. Most importantly, owners also gain the satisfaction of knowing that natural or historical features they treasure will be preserved for future generations.

Conservation easements can be used in estate planning to help keep families from losing their farmland. In areas such as ours, with increasing land prices, the high value of farmland translates into an inflated estate value for rural residents of modest means. Since federal and state estate taxes are due within nine months of the death of a landowner, heirs may have to sell family property in those difficult months after the loss of a parent to pay a large estate tax bill.

Families wishing to keep control of their land can reduce their future estate tax bill through planning -- including the donation of development rights on parts of their property. Such a conservation easement insures that traditional agricultural or forestry uses can continue on family land.

As with any activity involving land and taxes, a conservation easement has certain legal requirements attached, and some costs are involved. The conservation purpose must meet specific tests to prove that it provides a public benefit, such as preserving land for public recreation, preserving farmland, protecting wildlife habitat, or preserving an important historic site. An appraisal of the value of the conservation easement, title work, a survey and a legal description are required.

Often the recipient of a conservation easement will be a land trust or conservancy. These nonprofit citizen organizations are usually organized to promote conservation options for landowners in certain geographic areas, such as a county or watershed. The organization must be able to guarantee that the land will be protected in the way the owner envisions. To do so, it must raise funds or establish an endowment to cover the future cost of monitoring easements in its care.

A land trust may acquire land as well as conservation easements. In some cases, the outright donation (or bequest) of land is the best protection mechanism and provides the greatest benefit to the donor. In other cases, a trust may purchase particularly critical properties. For example, Preservation/North Carolina uses a revolving fund to purchase endangered historic properties. A trust may also purchase conservation easements from landowners, or assist with legal costs when needed. Some land trusts are also involved in conservation education and related activities.

One of the oldest and most active land trusts in our region is the Southern Appalachian Highlands Conservancy, which was organized more than two decades ago to preserve critical areas of Roan Mountain. Today, the Conservancy is looking at ways to expand its services in the Appalachians.

The local land trust interest group has naturally focused much attention on the Little Tennessee River and its watershed because of the importance of this natural resource to recreation, wildlife habitat, water quality and scenic values. Important historical and archaeological sites along the river also warrant preservation.

Conservation easements could be a useful way to protect the river corridor while preserving private property and providing benefits to landowners.

(Jamie Johnston is the executive director of the Little Tennessee Watershed Association. He can be reached at LTWA, 5 West Main St, Franklin, NC, 28734; or via e-mail at nbumppo@dnet.net.)

 

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