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Preserving land through a voluntary conservation easement agreement can
be a remarkable gift to your community. If you are interested in pursuing such a gift on your land, consider the following steps:
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Learn about conservation easements by contacting your local land trust and an attorney familiar with conservation law.
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Schedule a site visit with the land trust to determine if your land is eligible to be conserved under easement.
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Discuss any transaction costs that may be required to complete the deal, as well as potential tax benefits for a qualified
donation.
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Talk with your family and a qualified accountant to decide if a conservation easement fits with your family and
financial goals.
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Identify your property's potential conservation values; decide what you would like to see preserved.
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Obtain a title commitment (or ownership and encumbrances report) to determine the status of ownership, mortgages, mineral
interests, water rights, and other encumbrances on your land. Note that mortgages or liens must be subordinated to the
conservation easement in the event that a property is subject to a mortgage (your land trust can help you do
this). In addition, if the mineral rights are severed, the IRS requires a geologist to complete a mineral assessment detailing
the likelihood of surface mining on the property. Finally, in order to claim Colorado conservation tax credits, the easement
property must be owned by a Colorado taxpayer.
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Obtain a real estate appraisal that compares the "before" value of the land to its value after creation of the
easement in order to determine the value of the gift for IRS tax purposes.
DOWNLOAD GENERAL PROCEDURES & CHECKLIST FOR CREATING A CONSERVATION EASEMENT
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Consult with a tax advisor or attorney regarding the financial and legal implications of placing your land under easement.
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If your easement is eligible for Colorado conservation tax credits, determine whether or not you would like to sell these
credits or use them yourself.
Notify your land trust and register with any tax credit brokers early if you decide to sell your credits.
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Prepare a deed of conservation easement in cooperation with the land trust - both sides should have legal counsel. Recognize
that there are costs for the project for an appraiser, a
consultant to prepare a baseline documentation report (as required by
the IRS), and legal and financial advisors. Additionally, the Trust may
charge for its technical services and you will be asked for a voluntary
contribution to assist the Trust's perpetual obligations to steward the
property and defend the easement.
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Obtain a baseline inventory of the property to document the conservation values and ecological status of property at
the time of donation.
Sign and record the deed of conservation easement.
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File IRS form 8283 by April 15, signed by the land trust and your appraiser, to claim a federal income tax deduction.
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File Colorado Dept. of Revenue form DR 1305 by April 15 in order to claim or transfer your Colorado tax credit.
- Look for an annual monitoring visit from the land trust to verify that the easement is being honored.
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