This document provides an introduction to conservation easements. It defines a conservation easement as a voluntary land preservation agreement where a landowner gives up certain property rights while retaining overall ownership. Conservation easements must further conservation purposes like preservation of land, habitat, or historic structures to provide a public benefit. Landowners who donate easements may be eligible for tax benefits like deductions and state tax credits. Non-profit land trusts and government agencies accept conservation easement donations to ensure the restrictions are upheld over time.

1. PIEDMONT ENVIRONMENTAL COUNCIL
Introduction to Conservation Easements
Laura O’Brien | Piedmont Environmental Council
July 20, 2023

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439,782 acres protected in PEC’s 9-county region

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PIEDMONT ENVIRONMENTAL COUNCIL
What is a Conservation Easement?
• A voluntary land preservation
agreement negotiated between a
landowner and an easement holder.
• Landowner is giving up a “sticks”
(property rights) from the bundle of
property rights, while retaining overall
ownership of the land.
• In order to qualify for tax benefits, the
restrictions must last in perpetuity –
easements are forever.
• Easement must advance a conservation
purpose and result in
public benefit.

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What is a “Conservation Purpose”?
“Conservation Purpose” includes –
● Preservation of land areas for outdoor recreation or education
● Protection of natural habitat for fish, wildlife, or plants
● Protection of historic structures or land
● Protection of open space with significant public benefit for either scenic
enjoyment or pursuant to government policy (Federal, State, or local)
How does this translate to easement terms –
● Limiting the amount of subdivision and development allowed.
● Protecting important natural resources, including streams, productive ag
soils, forests and natural habitats from development.
● Limiting dumping, mining, grading, blasting.
● Allowing continuation of productive rural uses, such as agriculture,
forestry, hunting, and fishing

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PIEDMONT ENVIRONMENTAL COUNCIL
Benefits of Conservation to the Landowner
Permanently protect
the land you love
Access some of the land’s
cash value now without
having to sell any land fee
simple
Retain the right to own,
farm and sell the property
Assist in estate planning
Ability to take direct action
that can benefit the entire
community

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Myths about conservation easements
▪ You have to grant public access to your land.
▪ You can’t sell your land.
▪ You can’t continue to farm, hunt, fish.
▪ You can’t harvest timber on your land.
▪ You can’t pass your land on to your kids.
▪ Easement holder will tell you what to plant.
▪ One size fits all.
▪ Only an available tool for very large properties.

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PIEDMONT ENVIRONMENTAL COUNCIL
Who accepts / holds easements?
• State agencies (e.g. Virginia Outdoors
Foundation, Department of Forestry,
Department of Historic Resources)
• Local governments, like those with
Purchase of Development Rights
(PDR) Programs
• Non-profit organizations that meet
state and federal requirements (e.g.
PEC, Land Trust of Virginia, Old
Dominion Land Conservancy).
When a landowner places a conservation easement on a
property, an organization needs to be on the other side of that
transaction to be the holder (and steward) of the easement.

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PIEDMONT ENVIRONMENTAL COUNCIL
● Federal Tax Deduction – full or
partial easement donation
● State Tax Credits – full or partial
easement donation
● Local Purchase of Development
Rights programs
● Property Tax Benefits
● Estate Tax Benefits
● Other State / Federal Purchased
Easement Programs
Tax benefits
When the easement has a conservation purpose that provides
public benefit, the landowner may be eligible for financial incentives:

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$1,500,000
Value of property prior to protecting
land with a conservation easement
- $900,000
Value of property after protecting
land with a conservation easement
= $600,000
Value of conservation easement
(i.e. loss of property value due to easement)
(potential value of tax deductible charitable gift)
THIS IS A HYPOTHETICAL EXAMPLE ONLY AND IT IS NOT INTENDED TO BE TAX OR LEGAL ADVICE.
CONSULT YOUR OWN LEGAL OR FINANCIAL ADVISOR ABOUT YOUR PARTICULAR SITUATION.
Calculating the value of an easement

10. PIEDMONT ENVIRONMENTAL COUNCIL
PIEDMONT ENVIRONMENTAL COUNCIL
Tax Benefits: Virginia Land Preservation Tax Credit (LPTC)
❑ CREDIT is different than deduction – $1 of credit can be
used to pay $1 of VA Income Taxes owed.
❑ Each individual taxpayer can use no more than $20,000 in
LPTCs per year.
❑ Unused LPTCs may be carried forward for an additional 10
years (up to 11 years in total).
❑ Can transfer or sell unused LPTCs to other VA taxpayers.
Landowners who donate an easement may be eligible for
LPTC equal to 40% of the value of their donation.

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PIEDMONT ENVIRONMENTAL COUNCIL
Tax Benefits: Virginia Land Preservation Tax Credit (LPTC)
Assumptions:
Before Easement Value $1,500,000
After Easement Value $900,000
Easement Value $600,000
State Tax Credit (40% of $600,000) $240,000

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If eligible, this deduction would be equal to the value of their easement
donation minus the value of any LPTC.
It’s also subject to the following:
■ Donation can be used to deduct up to 50% of Adjusted Gross
Income
● For Qualified Farmer, donation can be used to deduct up to
100% of Adjusted Gross Income
■ Unused donation can be carried forward and used on future taxes
for 15 years (up to 16 years in total).
■ Cash value of deduction is going to be determined by your own
financial situation / marginal tax rate
THIS IS A HYPOTHETICAL EXAMPLE ONLY AND IT IS NOT INTENDED TO BE TAX OR LEGAL ADVICE.
CONSULT YOUR OWN LEGAL OR FINANCIAL ADVISOR ABOUT YOUR PARTICULAR SITUATION.
Tax Benefits: Federal Income Tax Deduction

13. PIEDMONT ENVIRONMENTAL COUNCIL
PIEDMONT ENVIRONMENTAL COUNCIL
Tax Benefits: LPTC and Federal Income Tax Deduction
Assumptions:
Before Easement Value $1,500,000
After Easement Value $900,000
Easement Value $600,000
State Tax Credit (40% of $600,000)
$240,000
Federal tax deduction (Easement value - LPTC)
$360,000

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PIEDMONT ENVIRONMENTAL COUNCIL
Getting Started: How much does it cost? Who to contact?
As with most real estate transactions,
landowner may incur the costs of working with
legal council, appraiser, accountant, and at
times a surveyor or tax credit broker.
Land trusts and other easement holders may
ask landowner for either a processing fee or a
stewardship donation to cover the expense of
ensuring the easement terms are forever
upheld.
Looking to learn more or get started? Contact
PEC!
We provide technical expertise and funding
support to help landowners protect the land
they love.