By the South Carolina Land Trust Network

What exactly is a conservation easement?

A conservation easement (CE) is a tool landowners can use to voluntarily protect their land. Simply put, a conservation easement is a legal agreement between a landowner and a private, nonprofit conservation organization or a government agency that permanently limits a property’s uses in order to protect its conservation values. Conservation easements allow the landowner to decide to restrict certain types of development on all or portions of their property. Once the CE is recorded in the land records, all future owners are bound by its terms – forever.

When you own land, you also “own” many rights that come with the land. When you donate a CE, you voluntarily and permanently give up some of those rights. For example, CE donors typically give up the right to develop the property for commercial or industrial purposes to protect the land from further development. You retain ownership of the property and certain other rights, such as rights to hunt and continue farming or harvesting timber on the property. In some circumstances, you may be able to retain limited rights to subdivide and/or build additional residential structures and related buildings on the property.

When you donate development rights through a CE to a land trust organization, they accept the responsibility to monitor the CE agreement and enforce its terms forever.

The donation of development rights has a value. If your gift meets the federal tax code requirements for protecting the conservation value of the land, the donation of a CE can be treated as a charitable gift and its value can be deducted from your federal income taxes. In addition, if your donation meets the federal requirements, you can qualify for a tax credit on your South Carolina income taxes. You should consult with your accountant or tax advisor as to whether your gift qualifies for such tax benefits.

Why would you enter into a conservation easement?

Preserve the uses and character of your land for generations to come.

Landowners place a CE on their land to ensure the character, uses, and beauty of their land will be available for future generations. This is the primary reason many landowners are interested in a CE.

Take advantage of federal tax deduction benefits to shelter income.

The Internal Revenue Service recognizes the gift of development rights to a land trust through a CE as a charitable donation. The value is determined by an appraisal that calculates the potential highest and best use of the land before the CE is in place and the value after the CE is recorded. The difference is the value of the gift and becomes the amount of the deduction.

* Federal tax deduction example:
* 100 acres of land valued at highest and best use: $300,000
* Land value after a CE is in place: $200,000
* Amount of your federal tax deduction: $100,000

The deduction is available in the year of the gift, and for five additional years. The IRS limits the amount you can shelter your adjusted gross income to 30%. There are bills in Congress to increase this limit.

Qualify for tax credit on your South Carolina Income Tax.

If your donation meets the federal guidelines, you can qualify for tax credits on your South Carolina Income Taxes, as of June 1, 2001. These credits are good forever. They can be assigned, transferred to others and sold. There are limits. You can get tax credits up to 25% of your federal deduction, or limited to $250 per acre of land under easement, whichever is less. You can use up to $52,500 in credits each year.

* S.C. tax credit example:
* Federal tax deduction; same 100 acres as above: $100,000
* 25% of the federal tax deduction: $25,000
* Your tax credit; cap of $250 per acre: $25,000 (100 acres x $250)

State tax credits can be used in one or more years, or transferred, assigned, or sold.

Reduce the taxable value of your estate.

The CE reduces the value of the land, thereby reducing the taxable amount of your estate. In order to qualify, the land value must be reduced by 30%. Your heirs can exclude an additional 40% of the land’s value at your death when a CE is on the land.

* Estate tax example:
* Original value of land/estate without CE: $300,000
* Reduction to taxable estate with CE: $100,000
* Additional 40% reduction after death: $40,000
* Taxable value of the estate after CE: $160,000

Potential Savings in Property Taxes.

Once a CE is placed on your property, your land will always be taxed at the lowest ad valorem rate, which is now the agriculture rate, even if the land around you becomes developed and rises in value. It is also possible to exempt lands from property taxes along S.C. State Scenic Rivers by placing the land under a CE with the State.

After the CE is in place, what happens?
You and successive owners continue to own, manage and pay taxes on the land. You can continue the uses of the land that you agreed to retain. Your property is still private property. You can pass the property on to the next generation, sell it, trade it – you retain all the rights of ownership, except those that you voluntarily gave away.

What land uses can the CE allow?

* Permanent protection of significant ecological areas, wetlands, watersheds, river and stream buffers, scenic views, woodlands, wildlife habitat, open space.
* Allows continuation of timber harvesting, agricultural activities, planting for wildlife and game habitats.
* Allows protection of cultural, historic and archaeological sites.
* May allow limited subdivision of the land and housing development.
* Allows continuation of limited traditional uses of the land, home-based business pursuits.

How do you get started?

* Discuss your plans with your family and/or partners.
* Call a local land trust organization and discuss your plans with their staff. They can help you begin the process of writing the easement and help lead you through the steps.
* Contact an attorney to represent your interests.
* Contact an accountant or tax advisor regarding potential tax benefits.
* Survey the area to be put under easement (this may not be necessary if you have an existing plat or place the CE on all of an existing subdivided tract).
* Hire an appraiser to determine the value of the donation.
* Work with a local land trust to have a baseline assessment of the easement area to document the state of the land at the time of the gift.

What is the S.C. Land Trust Network?

Our mission is to facilitate the preservation of the natural and cultural character of South Carolina through the exchange of information among land trusts, and to encourage cooperation on matters of common interest. The network will create awareness and seek support of the general public to conserve natural resources of the state.

The network is composed of 20 land trusts within the state and four national land protection organizations that have offices in South Carolina.  These organizations have joined together as members of the South Carolina Land Trust Network to share ideas and learn about new opportunities.

For more information about the network and its member organizations and a listing of local land trusts go to their website at www.dnr.state.sc.us/lwc/scltn/index.htm

Where can I get more information about land trusts?

To find land trusts in South Carolina or in other areas of the country, contact the Land Trust Alliance, a national organization. Log on to their web site www.lta.org and click on “Find a Land Trust.” You may also call the Land Trust Alliance for information at (202) 638-4725.