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How Easements Work | Tax Benefits of Donating Easements
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How Easements Work

When you own land, you hold many rights associated with it (such as the right to harvest timber, build structures, extract minerals or farm—subject to zoning and other laws). By placing an easement on your land, you voluntarily limit or relinquish some of those rights. The prospective easement holder (generally a nonprofit land trust or government agency) works with you to tailor an easement that protects the land’s natural and cultural values and meets your land use goals.

Rocky shoreline

photo: Sara Gray

Conservation easements enable landowners to permanently protect their cherished properties while retaining ownership.

Potential Benefits that Easements Offer Landowners

  • Easements provide permanent protection, applying to all future landowners. A land trust or government agency upholds the restrictions over time.
  • Landowners retain title to their property and may continue to live on it, sell it, or pass it on to heirs, knowing that it always will remain protected.
  • Easements can aid in estate planning, reducing estate taxes that could force the sale of family lands. Donated easements also can provide a charitable income tax deduction.
  • Easements can reduce property tax by eliminating unwanted but highly valuable development potential.
  • Easements can minimize family conflicts when lands pass to the next generation.

Most easements limit the number and location of future structures and the types of land uses that can take place. Those that allow for future building often dictate that structures be set back from shorelines and be limited in size and visibility. The restrictive covenants in an easement protect the land’s important natural resources. Sensitive wildlife habitat or an old growth forest, for example, might merit a forever wild easement that specifies no future alteration of the land’s natural resources. Farmland or woodlots might have less restrictive covenants that prevent subdivision, limit construction and specify that agriculture or forestry be done in a sustainable manner. Some easements ensure traditional public uses (e.g., hiking, clamming or berry-picking), depending on landowner preference.

If you choose to allow for some development, you can either place an easement on your entire property and limit development to a building envelope(or homestead area), or you can simply place the easement on the undeveloped portions—leaving out that envelope around existing or planned dwellings. While the latter approach is simpler, it is not always advisable. To effectively protect the conservation values of your entire property, it may be necessary to place restrictions on the built portions (and clearly define and mark the parameters of your building envelope).

The easement holder assumes permanent responsibility for enforcing the easement’s terms. One local land trust director, Lucy McCarthy of Vinalhaven, describes the holder’s role as one of “a partner and trusted advisor, helping landowners protect a valued resource.” This stewardship involves an annual inspection of the property and ongoing contact with the landowners. The easement holder is available to discuss any major planned changes and to help answer questions about resource protection. If an easement is violated, the holder takes action to have the violation corrected (including legal measures although these are rarely required). Even routine stewardship can be expensive. Therefore, the land trust must raise funds to support stewardship, and generally requests a stewardship contribution from the easement donor. In McCarthy’s words, it’s important “for the community to see that we have sufficient resources to stand by our protected properties, upholding the landowner’s wishes in perpetuity. It sends a strong signal to other landowners that they can make gifts to us in trust.”

While the easement is a popular and versatile conservation tool, it may not be the best choice for all landowners. Some lands lack sufficient conservation significance to merit protection with an easement. Other lands, such as those that receive extensive public use, might best be owned and managed by a public agency or private land trust.