Land FAQs

Donating conservation land to a land trust is a wonderful way to share its beauty with future generations. The donation can even be set up in a way that allows you to continue to live on the land or to receive a life income.

Doing nothing to protect it may doom your land to development. Why? Estate taxes are one reason. Federal taxes can be as high as 55% of a property's fair market value, virtually forcing heirs to sell it. And, of course, future owners may be compelled by ever-increasing property values—or simply by a lack of appreciation for the land—to sell it for development.

A legal agreement between a landowner and a land trust or government agency that permanently protects land while the landowner continues to own it.

Donating the easement can result in reduced income tax and estate tax.

Conservation easements must meet certain qualifying criteria before Jefferson Land Trust can accept them.

The conservation easement provides a practical, legally effective means for a private landowner to protect forever the significant features of a property, or a portion of a property, while retaining private ownership.

By defining and removing particular rights from the ownership of a parcel of land, the conservation easement creates permanent safeguards against uses of the land that could damage or destroy its ecological, scenic, recreational, or resource values.

Each conservation easement is written specifically to address the needs and desires of the owner, the natural characteristics of the land, and the conservation objectives of the protecting organization. Therefore conservation easements must meet certain qualifying criteria.

Conservation easements are most often donated to nonprofit nature conservancy organizations, such as Jefferson Land Trust, or to a governmental agency. The holder of a conservation easement is obligated to safeguard its restrictions in perpetuity.

Jefferson Land Trust takes its stewardship role seriously. Once it accepts a conservation easement, the Land Trust must protect the property forever, "in perpetuity". This is a significant commitment of the limited personal and financial resources of the Trust, but it is a promise that can never be ignored or broken. Consequently, the members of the Land Trust's Board of Directors must carefully evaluate each proposed easement with respect to the Land Trust's conservation goals and manegerial abilities.

Jefferson Land Trust's conservation goals are sufficiently broad to include a wide variety of lands. In support of these goals, the Trust uses the following criteria to evaluate lands being considered for protection by the Land Trust, by asking if the land has one or more of the following characteristics:

• Is it habitat for endangered, threatened, or rare species?
  
  
• Does it contain exemplary natural ecosystems such as old-growth forests, or migratory waterfowl staging and/or wintering areas?
  
  
• Is it valuable for timber or agricultural production?
  
  
• Does it include shoreline and riparian areas?
  
  
• Does it include wetlands, floodplains, or other lands important for the protection of water quality?
  
  
• Does it include parcels that could be connected to from greenbelt corridors between privately protected or publicly held properties?
  
  
• Does it include parcels that could be connected to form greenbelt corridors between privately-protected or publicly-held properties?
  
  
• Does it include unique local scenic viewspoints or outstanding physiographic features (for example, distinct outcroppings, waterfalls, or bluffs) that help define the character of our locale and enhance our community's sense of place?
  
  
• Is it a heritage site of historic and/or prehistoric importance?
  
  
• Does it include ecosystems of educational or scientific value?
  
  

In addition to satisfying the above ten criteria, Jefferson Land Trust must be confident that it can adequately fulfill its stewardship responsibility for each property or easement which it accepts. Some important questions are:

• Is the land currently protected?
  
  
• Could another organization better protect the property?
  
  
• Can an enforceable management plan be developed?
  
  
• Do legal restrictions limit acceptance of the gift?
  
  
• Can a public outreach campaign be developed to promote the gift?
  
  
• Can the Land Trust protect the property in perpetuity?
  
  
• Is a funding source in place to support on-going monitoring?
  
  

Every landowner is the holder of certain rights related to the use of land and its resources. Historically, some of these rights—such as mineral and timber rights—have been used, taxed, or transferred separately from outright ownership. Road and utility easements also are examples of modifications of the rights of exclusive ownership. A conservation easement arises out of this principle of separating and modifying land ownership rights.

A conservation easement is created by a landowner (the "grantor") who desires to transfer certain rights to a conservation organization ("the grantee"), under an agreement which prohibits the grantee's exercise of those rights. Working cooperatively, the landowner and the grantee identify appropriate uses for the land and detail activities which should be prohibited. For example, a landowner may transfer the right to use a property for residential development to the grantee. The grantee organization then holds that right, but is prohibited by the terms of the conservation easement from ever using it. Thus, it is assured that no future owner will have the right to use the property for residential development. Conservation easements are perpetual, restricting future land uses regardless of who may own the land in the future.

Land subject to a conservation easement is still privately owned and managed. All rights of ownership which have not been transferred to the grantee may be exercised by the current owner. For example, a landowner may transfer the rights to develop a property for commercial, industrial, or multi-residential purposes while retaining rights to use the land for farming, harvesting of timber, or for the owner's personal residence.

Under Washington State law (RCW 64.04.130), a conservation easement may be held by a non-profit nature conservancy corporation or by a federal, state, or local government.

Jefferson Land Trust, which was incorporated by local residents in 1989, meets all of the qualifications of this Washington law as well as those imposed by federal law to qualify as a tax-exempt charitable institution under section 501(c)3 of the Internal Revenue Code.

Only if the protecting property owner specifies public access as a permitted use of the land.

A landowner may allow limited access for educational or scientific purposes, but public access is not required by Jefferson Land Trust as a condition of accepting a conservation easement. However, the Land Trust is obligated to arrange an annual visit to the site by its representative(s) to assure compliance with the terms of the conservation easement.

Land protected by a conservation easement may be sold, bequeathed or otherwise transferred at any time.

An easement may apply only to certain portions of a property, preserving open or wooded areas, for example, while permitting development of the remainder. Ownership of the portion protected by the conservation easement may be divided for purposes of limited or cluster development if deemed appropriate by the granting landowner.

Transfer of ownership will not affect the integrity or enforceability of the easement. Restrictions defined in the recorded conservation easement run with the title to the property forever, providing landowners an effective means of perpetuating their caring stewardship.

At the time a conservation easement is created, plant and wildlife inventories are added to photographic information to provide a baseline for future monitoring. Annual visits are arranged by the Land Trust in order to determine that the terms and conditions of the conservation easement are being honored.

If a violation is identified, the landowner is promptly notified, in accord with procedures outlined in the conservation easement, and steps must be taken to repair any damage. The easement also defines the process to be followed to resolve disputes regarding an alleged violation of the easement. If necessary, the Land Trust will take legal action to fulfill its conservation easement obligations.

A Stewardship Fund is created in conjunction with the acceptance of each conservation easement. It is used exclusively for that property to cover future expenses of monitoring, enforcing compliance with easement restrictions, and underwriting legal defense of the easement protections. The amount required for a stewardship fund is proportional to the responsibility being assigned to the Land Trust under the terms of the conservation easement.

• Income Taxes

  Potential federal income tax benefits vary with the particulars of each conservation easement. To qualify as a charitable gift, which may be deductible for federal income tax purposes, donation of development rights through a conservation easement must be granted in perpetuity to a qualified conservation organization --such as Jefferson Land Trust . The value of the gift, determined by a formal appraisal, is the difference between the fair market value of the property before and after donation of the conservation easement . To be deductible, an easement must serve conservation purposes by preserving natural habitat, historic sites, unique scenic landscapes, wildlife corridors or connections to other protected parcels, areas of concern for public education or recreation, or open spaces in the vicinity of intense land development. In general, the maximum allowable deductions arise from conservation easements donated over large tracts of open space in areas where development pressures are intense.

• Estate Taxes

  State and federal inheritance taxes on unrestricted land are often so high that heirs are forced to sell some or all of the land just to pay these taxes. Because a conservation easement reduces the market value of the property by reducing its development potential, inheritance taxes are also reduced. A conservation easement can enable heirs to retain property that would otherwise have to be sold.

• Gift Taxes

  When a gift of land is made to a family member or other person, it is subject to federal gift taxes if its value exceeds the maximum tax free amount. A reduction in the value of the property through a conservation easement may allow a landowner to give more land in any one year without creating a gift tax obligation, or it may help reduce the amount of gift tax owed.

• Property Taxes

  Under Washington property tax law, land subject to a conservation easement can qualify for a reduction in assessed valuation. Jefferson County has adopted a public benefit rating system, which is used to determine the percentage of reduction in assessed valuation. A range of points is assigned to various factors which have been determined to be valuable to the public. A minimum number of points must be accumulated in order to receive a reduction in assessed valuation. Conservation easements receive six points on a scale of twelve, while other special attributes of the property may result in further reductions. The maximum possible reduction is 90%.

Selling land to the land trust at less than its fair market value can make it affordable for the land trust and provide tax benefits for the landowner.

Gifts to Jefferson Land Trust can help protect some of our area's most beautiful lands while enabling the givers to realize tax benefits. Below is a summary of tax-saving gift arrangements and ideas that you may wish to consider in your financial and estate plans.

Tax laws change. Professional financial counsel is essential because each donor's tax situation is unique. You should consult your attorney or tax planner to furnish you with more complete details.

• Outright Gifts

  Outright cash gifts are the simplest way of gaining tax deductions while supporting Jefferson Land Trust. However, donations of other assets such as real estate, securities, closely-held stock, life insurance, or valuables such as artwork or coin collections, may be more appropriate to your situation.

  Real estate that meets the Trust's acquisition criteria would be protected in its natural state, or according to terms and conditions outlined in a conservation easement. Other donated real estate such as homes, vacant lots, or commercial and industrial properties, may be sold (with development restrictions, if appropriate), with the proceeds used to further the goals of Jefferson Land Trust. Gifts of appreciated real estate held long-term may entitle you to an income tax deduction for its full fair market value, subject to certain limitations.

• Donations of Conservation Easements

  Potential federal income tax benefits vary with the particulars of each donation. Essential points to consider are the following:

  • QUALIFIED CONSERVATION ORGANIZATION - The easement must be granted to a qualified conservation organization, such as Jefferson Land Trust, or a public agency charged with overseeing land conservation or historic preservation programs.
    
    
  • CONSERVATION PURPOSES - An easement must be granted exclusively for conservation purposes such as preservation of natural habitats or resource lands, historic sites, unique scenic landscapes, wildlife corridors or connections to other preserved parcels, areas of concern for public education or recreation, or open spaces in the vicinity of intense land development. In general, the maximum allowable deductions arise from conservation easements donated over large tracts of open space in areas where development pressures are intense.
    
    
  • PERMANENCE - The easement must be granted in perpetuity.
    
    
  • AMOUNT OF DEDUCTION - The amount a property owner can deduct for a donated easement generally equals the reduction in the property's value due to the easement (the difference between the property's independently appraised value before the easement is granted and after the easement's restrictions take effect).
    
    
  • APPRAISALS - The appraisal that determines the easement value must meet strict federal substantiation requirements as specified in federal tax law regarding conservation easements.
    
    

• Limits on Deductions

  Taxpayers cannot eliminate all of their taxable income by making charitable donations, no matter how large the donation. In general, the deduction for charitable donations of appreciated property cannot exceed 30 percent of the taxpayer's adjusted gross income, although any excess amount may be carried forward and deducted over the five succeeding years. Under some circumstances, the donor may be subject to the Alternative Minimum Tax. An accountant or tax lawyer can determine whether the AMT will apply to your situation.

• Estate Taxes

  Many heirs to large historic estates and to large tracts of open space—farms, ranches, and timberland in particular -- face substantial estate taxes. Even if heirs wish to keep inherited property in its undeveloped condition, the federal estate tax is levied not on the current use value of the property, but on its "highest and best use", or the amount a developer or speculator would pay. The resulting estate tax can be so high that the heirs must quickly sell the property to pay the taxes.

  A conservation easement can reduce estate taxes because the donation of the easement reduces the value of the property. This easement can be devised (donated) as part of a will, and then deducted from the taxable estate. The gift of a qualified easement usually must be included within the donor's will to ensure the tax savings, however changes in the tax code provided by the Taxpayers Relief act of 1997 may allow easements to be placed on the property by the heirs during the probate period.

• Local Real Property Taxes

  Local real property tax assessments are based on a property's fair market value, which considers the property's development potential. If a conservation easement reduces the development potential of the property and limits its use, then the level of assessment and, accordingly, the amount of real property taxes, may be reduced. Jefferson County has adopted a public benefit rating system which is used to determine the percentage of reduction in assessed valuation. A range of points is assigned to various environmental factors which have been determined to be valuable to the public, with at least six points being needed to qualify for a reduction in the assessed value. Conservation easements receive six points on a scale of twelve, while other special attributes of the property may translate directly into further reductions in assessed value. Reductions of up to 90% of the assessed value can result.

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  Parts of the above information were excerpted from "The Conservation Easement Handbook: Managing Land Conservaton and Historic Preservation Easement Programs", by Janet Diehl and Thomas S. Barrett. Another outstanding reference is "Preserving Family Lands: A Landowner's Introduction to Tax Issues and Other Considerations", by Stephen J. Small. Both of these books are available from Jefferson Land Trust.

  Title 84RCW 36.260-64 and WA458-16-290 (Revised Code of Washington) provide guidance on Washington Property tax exemptions. Information about the public benefits rating system is available from Jefferson County, which reviews open space applications within the county.

While any landowner may attach conservation restrictions to a property title before transferring it, an owner who donates a conservation easement to Jefferson Land Trust can be assured that compliance with the identified protective goals will be annually reviewed, and that future owners will not alter the land contrary to the owner's wishes.

For more informations see qualifying criteria.