A conservation easement is a voluntary legal agreement between a landowner and a conservation organization that limits future development for a piece of land. This is a very effective tool that can be used to preserve wildlife habitat, scenic open space, agricultural land, or the historic features of a building or site, while landowners continue managing and enjoying their property in all ways compatible with preserving the land’s conservation values.

For landowners who envision the special qualities of their land being preserved long after ownership has passed out of their hands, a conservation easement is means of achieving their vision. Most conservation easements are perpetual. They “run with the land” so that the restrictions apply even when a new owner takes title to the property. The land trust takes on the responsibility of visiting the property on a regular basis to make sure the terms of the agreement are still in place. 

A conservation easement does not grant public access to private property. Land subject to a conservation easement can be passed on to heirs. An easement can be applied to the landowner's entire property or to only a portion of it.

The donation of a conservation easement to an eligible conservation organization may qualify as a tax-deductible charitable donation for federal and state income tax purposes. The amount of the donation is determined by a certified appraiser to be the difference between the land's value with the easement and its value without the easement. A conservation easement may or may not result in property tax savings.

In August 2006 Congress approved a significant expansion of the federal conservation tax incentive for conservation easement donations. The new law raises the deduction a landowner can take for donating a conservation easement to 50% of their income in any year for up to 15 years. It also allows qualifying farmers and ranchers to deduct up to 100% of their income for up to 15 years. If not renewed by Congress, this incentive will expire at the end of 2007.

Currently the state of New Mexico offers a non-transferable tax credit of up to $100,000 per year to anyone donating a qualified fee interest or conservation easement to an open space program or environmental organization or government entity. The credit is for 50% of the fair market value of the land and may be carried forward for twenty successive years. Beginning January 1, 2008, the credit will rise to $250,000 and become transferable. This incentive applies in addition to federal tax benefits.

Perhaps most important to many families, a conservation easement can be essential for passing land on to the next generation. By removing the land's development potential, the easement lowers its market value, which in turn lowers estate tax. Whether the easement is donated during life or by will, it can make a critical difference in the heirs' ability to keep the land intact.

Anyone considering granting a conservation easement should consult their own attorneys and tax advisors about the most current regulations and incentives, and the legal and tax implications of the proposed grant. Conservation easements are not easily amended or terminated, so it is important that landowners have expert advice when making such a decision.