Valuing the donation of a Conservation Easement

Example 90 acres of Acres of Natural Area: Open Land , Forest , and Wetland

$500,000 Appraised Fair Market Value

$240,000 Appraised Value Restricted to Open Space and wildlife habitat

$260,000 Appraised Conservation Easement Value

Income Tax Saving

Landowner's Adjusted Gross Income = $80,000

30% of Adjusted Gross Income is the maximum deduction for one year, but the landowner can spread the donation over six years. Depending on income, a landowner may not be able to use the entire donation as an income tax deduction

$24,000 = Maximum one-year deduction

$24,000 X 6 = $144,000 maximum deduction over six years, assuming a constant income of $80,000 a year (Note: The landowner cannot use $116,000 of the donation, and it is lost)

Estate Tax Saving

Estate Value reduction = $260,000. Actual estate savings will depend on size of the landowners estate and year of settlement

Property Tax Savings

Vary from state to state and even community to community. In some cases, there may be no property tax savings

From The Environmental Planning Handbook

by T. & K. Daniels (2003)