The Federal
government has created powerful incentives to promote land
conservation by landowners and their heirs. Conservation easements
can result in significant estate tax savings for heirs of land.
If a landowner
places a conservation easement on their land and subsequently dies,
the value of the property is included in his gross estate at its
easement restricted value. Without the easement, the land would be
valued for estate tax purposes at its unrestricted value (which can
be much higher). This alone is a powerful incentive for landowners
to create conservation easements.
A 1997 tax law
increased (in some cases, dramatically) the amount of estate tax
savings. This law allows landowners to deduct up to 40% of the
value of all land under a conservation easement as long as the
easement was donated by the landowner or a member of his family and
was owned for 3 years prior to death. This can provide up to an
additional $500,000 reduction in the value of land under easement
for estate tax purposes. (There are also slight limitations imposed
where the value of the conservation easement does not reduce the
overall value of the land by at least 30%.)
These incentives may
lower or eliminate the estate taxes on a property and allow land to
remain in the family rather than being sold to pay estate taxes.
These are especially relevant incentives for farmers and landowners
that are “land rich” and “cash poor.”
With ever changing
Estate Tax laws it is important to check with tax lawyers and
experts to get appropriate advice when considering conservation
easements and estate tax benefits.
If you are
interested in learning more about conservation tax incentives,
please contact us at (845) 677-3002.
This information does not constitute legal or tax advice and DLC
strongly recommends that you discuss your land conservation options
with legal and tax professionals.
