Introduction

Conservation easements are a widely used philanthropic tool for land preservation: they allow landowners to lock in conservation outcomes (wildlife habitat, scenic views, agricultural use) while donating the value of the development rights to a qualified organization. In my 15 years advising families on charitable land gifts, I’ve seen easements conserve critical landscapes and also create meaningful tax and estate-planning benefits—but not without significant trade-offs and detailed documentation requirements.

Why donors choose conservation easements (the pros)

  • Durable conservation outcome: Easements are typically perpetual, ensuring the land’s conservation values persist for future generations and aligning with many donors’ philanthropic missions.
  • Potential federal tax benefits: Donating a qualified conservation easement can qualify as a charitable contribution under IRC §170(h), which—when properly documented—may lower federal income and estate taxes (see IRS guidance).
  • Estate planning and liquidity: An easement can reduce the taxable value of an estate and help manage estate tax exposure without selling the land. Some landowners use the reduction in taxable value to create liquidity or to fund trusts or life insurance.
  • Community and legacy benefits: Conserving farmland or natural landscapes can support local economies, outdoor recreation, and a family legacy of stewardship.

Key drawbacks and risks (the cons)

  • Perpetual restrictions: Easements are usually permanent. Once recorded, the restrictions run with the land and bind future owners—limiting development, subdivision, or other uses you might want later.
  • Valuation complexity and IRS scrutiny: Establishing the charitable deduction requires a qualified appraisal and careful substantiation. The IRS scrutinizes large or unusual easement deductions and has pursued audits and adjustments where documentation or conservation qualifications are weak (IRS warnings about abusive transactions).
  • Ongoing stewardship obligations: The recipient organization (often a land trust) must monitor compliance and may require a stewardship endowment to fund monitoring and enforcement; donors sometimes bear setup costs.
  • Potential impact on marketability and financing: Lenders, buyers, and title insurers evaluate easements differently. Easements can reduce market value or complicate mortgage approval if the restriction conflicts with lender policies.
  • Costs and complexity: Legal work, appraisals, baseline studies, title reviews, and drafting fees can be substantial upfront expenses.

How a conservation easement donation actually works (practical steps)

  1. Define your conservation goals. Decide what values you want to protect (habitat, agricultural use, scenic views) and how that intersects with family and financial goals.
  2. Identify a qualified recipient. The donee must be a qualified public charity or government entity that has a conservation purpose and the legal capacity to enforce the easement. Confirm the organization’s 501(c)(3) status and experience—see local land trusts and national groups like the Land Trust Alliance for standards (https://www.lta.org).
  3. Baseline documentation and easement terms. The land trust typically prepares a baseline report documenting ecological, agricultural, and physical conditions. The easement document specifies prohibited uses and reserved rights.
  4. Appraisal and valuation. A qualified, independent appraisal that follows IRS rules is required to support the charitable deduction. The appraisal calculates the difference between the property’s fair market value before and after the easement is placed.
  5. Substantiation and tax filing. You’ll need the donee’s acknowledgment, the qualified appraisal, and to file the correct tax forms—most notably Form 8283 for noncash charitable contributions and the appraisal summary as required by the IRS (https://www.irs.gov/charities-non-profits/conservation-easements and https://www.irs.gov/forms-pubs/about-form-8283).
  6. Monitoring and enforcement. The donee enforces the easement and monitors the property regularly. Donors should understand the conservation organization’s monitoring plan and whether a stewardship fund is required.

Tax and documentation considerations (what the IRS looks for)

  • Qualified conservation contribution: The gift must meet the IRS definition of a ‘‘qualified conservation contribution’’—conveying a clearly defined conservation purpose (e.g., preservation of land for outdoor recreation, protection of ecosystems, or preservation of open space) to a qualified organization under a perpetual restriction (IRC §170(h)). See the IRS landing page for conservation easement rules: https://www.irs.gov/charities-non-profits/conservation-easements.
  • Appraisal and Form 8283: A qualified appraisal is required for most easements and Form 8283 must be filed with your return when required. The donee (land trust) must sign Section B of Form 8283 for contributions above certain thresholds—follow current IRS instructions closely: https://www.irs.gov/forms-pubs/about-form-8283.
  • Documentation and substantiation: Maintain baseline reports, easement documents, appraisal reports, deeds, and donee acknowledgments. The IRS has increased documentation requirements in response to abusive transactions, so thorough records are essential.
  • State rules and credits: Some states offer tax credits or separate rules for land conservation. State conformity to federal rules varies, which can affect state tax treatment of the donation.

Due diligence checklist (practical items I recommend)

  • Confirm the donee’s 501(c)(3) status and conservation track record. Use a reputable local land trust or government entity with long-term monitoring capacity.
  • Order a qualified appraisal early—don’t use in-house or informal estimates. Meet the IRS standards for appraisers and appraisal reports.
  • Run a title search to identify existing easements, encumbrances, or mortgage issues; discuss mortgage subordination with your lender if required.
  • Negotiate stewardship funding: ask whether the donee requires an endowment to assure monitoring and enforcement.
  • Ask about the organization’s enforcement history and how violations are handled.
  • Discuss future flexibility: can limited reserved rights or amendments address foreseeable family changes while preserving conservation intent?
  • Consult tax counsel: coordinate with a CPA or tax attorney experienced in conservation easements to document and structure the gift.

Interlinking resources

Common mistakes and IRS red flags

  • Relying on an unqualified appraisal or late appraisals. The appraisal must be prepared by a qualified appraiser and reflect a credible valuation methodology.
  • Donating to an organization without enforcement capacity or 501(c)(3) status—this can disqualify the deduction.
  • Failing to document the baseline condition, monitoring plan, and stewardship arrangements.
  • Treating easements as purely personal financial planning without recognizing perpetual public benefits requirements—the public benefit component is central to the charitable deduction.

Situations where an easement may not be the best tool

  • If you expect to sell or subdivide the property in the near future, the perpetual nature of most easements will likely be incompatible.
  • If the costs of appraisal, legal work, and stewardship endowment outweigh the tax or conservation benefits for small-acreage parcels.
  • If you need maximum flexibility for future development or family sales—other philanthropic options (e.g., donating sale proceeds, contributing to a donor-advised fund, or gifting a remainder interest through a charitable trust) may pair better with financial goals.

Final professional tips

  • Get all key professionals involved early: an experienced land-conservation attorney, a qualified appraiser, a CPA familiar with charitable real estate gifts, and the prospective donee organization.
  • Budget for upfront costs and a stewardship fund; these are part of responsible conservation giving and increase the durability of the gift.
  • Keep clear records and follow IRS guidance closely—doing so reduces audit risk and preserves the gift’s charitable character.

Authoritative sources and further reading

Disclaimer

This article is educational and not tax or legal advice. Conservation easement rules are technical and fact-specific; consult a tax advisor and conservation attorney before executing an easement.