THE STATE WE’RE IN by Michele S. Byers
With all of the talk in Washington about repealing the federal estate tax, I would like to highlight a powerful estate tax tool that many landowners can use today: the conservation easement. Conservation easements do provide tax relief, and also will help us save 1 million acres in New Jersey.
What is a conservation easement, and how does it relate to land preservation?
A conservation easement is a permanent restriction on the deed of a piece of property. It generally restricts the future use of the property for conservation purposes and effectively strips away the development rights. Conservation easements stay on the deed with all future owners of the land, in perpetuity. These easements can be donated, sold or sold at a bargain.
Much of the farmland to be preserved under our million-acre program will be by acquiring conservation or farmland easements. A conservation or farmland easement permanently restricts development on a property, while the original owner retains title to the land, and the property stays in private hands. The development rights are held in trust for the public, either by a government agency or by a qualified conservation organization like New Jersey Conservation Foundation.
The easement is one of several critical tools in our quest to save 1 million acres. But to meet this goal, we need many easements donated, or at least partially donated. That’s where estate taxes come in. According to Forbes magazine, it’s “a nifty way to get a big tax break and protect valuable property.”
The Wall Street Journal spotlighted the conservation easement in a story titled “Conservation Easements Lighten Taxes.” The story shows how donating an easement — that is, donating the development rights to land —can ensure its permanent preservation and have significant tax benefits as well.
Currently, landowners who donate conservation easements can benefit in four ways. First, the value of the donated development rights is treated as a charitable deduction against federal taxes. Second, annual property taxes may be lowered. Third, and sometimes most significantly, estate taxes may be reduced. Finally, landowners have the assurance that their land will remain open and natural into the future.
In my experience with easement donors, the bottom-line motivation is preserving the beauty of the land for the future. But tax incentives help, and in order to accomplish the state’s ambitious million-acre goal, we need every inducement we can get.
We need to let more people know about the benefits of conservation easements. If you have an easement on your property now or would like to protect your land, please, I encourage you to call me, and we’ll help you understand the benefits of conservation easements.
If you are interested in placing a conservation easement on your property, in using the easement to preserve land in your community, in learning more about the tax benefits of easements and donations, or for more information on preserving New Jersey’s land and natural resources, contact me at New Jersey Conservation Foundation, 1-888-LAND-SAVE, www.njconservation.org.
Michele S. Byers is executive director of the New Jersey Conservation Foundation in Far Hills.