Step 1. Preliminary Discussion

Call us 512.301.6363 or fill out the contact form below. Read over our mission and make sure it is compatible with you goals. Let us know some basic information during this initial phone call or in the contact form, including location, size, interesting species, current land use, your future goals, etc.

Step 2. Site Visit

After initial discussions, we like to make an on-the-ground visit and conduct an initial evaluation to assess if TLC can help in conserving your property. Typically, our Executive Director and/or a member of our stewardship staff will visit with you, tour the property, take photos and ask you questions about the property and your conservation goals. This visit can be scheduled at your convenience.

Step 3. Board Approval

As a non-profit organization, we are governed by a Board of Directors, which sets the strategic direction of our mission and focus. The Board must also approve each conservation easement project. Following the site visit, our staff will present your project to the Board for their approval.

Step 4. Independent Legal Advice

TLC does not provide legal or financial advice. We strongly recommend that landowners acquire legal representation and consult a financial advisor to understand the specifics of conservation easements as well as the tax implications of an easement. We will be happy to refer you to people we have worked with successfully in the past.

Step 5. Easement Drafting

Drafting the easement itself is typically a negotiation between your legal representation and ours. Once you have provided basic ideas for future property management, your legal representative and TLC work together to draft a conservation easement specific to the property. Because a conservation easement is essentially a deed restriction, the easement will remain attached to the title of your property in perpetuity, even if you choose to sell your land. Therefore, it is essential that we work with you to create a strong document that provides adequate protection for the conservation values of your land and enough flexibility that you and your heirs can continue to live and work on your land.

Step 6. Appraisal

Once the easement is drafted and acceptable to both parties, a qualified independent appraiser will assess the value of the easement donation. A qualified appraisal is one that has been prepared by an appraiser who follows Uniform Standards of Professional Appraisal Practice. The appraiser will assess the value of your property with and without a conservation easement. The difference between these two values is considered the value of the easement donation. This step is a requirement for any landowner who intends to take an income tax deduction from the donation of an easement and is the financial responsibility of the landowner.

Step 7. Baseline Documentation Report

Part of the easement process is documenting the condition and ecological variables present on the property. This report is called a Baseline Document Report (BDR). It contains the property’s historic and present land uses, man-made features, ecological features, wildlife use and habitats, soils, hydrology, geology, and scenic values. The most important part of the BDR is the documentation of the conservation values of the land, which are what the conservation easement itself is working to protect and what qualifies conservation easement donations to be tax deductible by the IRS. The BDR is required and the financial responsibility of the landowner.

Step 8. Stewardship Fund

One of TLC’s responsibilities in accepting an easement is conducting monitoring visits each year per IRS regulation. As part of the commitment to the perpetual monitoring of the property, TLC typically asks for a donation with each conservation easement. This is a one-time contribution and is calculated using a standard formula, which includes property size, distance from our offices, preparation and reporting time, number of landowners, and several other items.

Step 9. Executing Easement

The easement is signed, notarized, and recorded at the courthouse in the appropriate county.

Step 10. IRS Form

Landowners who wish to take a charitable deduction for a gift of a conservation easement with a value in excess of $5,000 must report the value of such a gift on IRS Form 8283 (Noncash Charitable Contributions) and submit this form with your federal income tax return. TLC must sign this form. Donors who claim a deduction of more than $500,000 must attach a complete copy of a qualified appraisal to the tax return for the year in which the deduction is first claimed.

Step 11. Monitoring

Once a year, a member of TLC’s stewardship staff will contact you to schedule a monitoring visit to your conserved land. The staff member will spend time on the property to check that the easement provisions are being followed. Following the monitoring visit, the staff member will create a report of the property condition (a copy may be provided to you at your request) that will be kept in our offices. In addition to annual easement monitoring, our staff will be available to you throughout the year for land management resources or advice.

Do You Qualify for a Tax Deduction?

To qualify for a tax deduction, your donation must be considered a charitable gift by the Internal Revenue Service (IRS). To determine whether your gift meets IRS requirements, it is best to review the proposed gift with an experienced attorney or accountant. A deductible, charitable donation can be made only to an IRS-qualified, tax-exempt organization. It must be considered a true gift motivated by a charitable intent and not granted as a requirement for getting something in return. For example, a conservation easement donated by a developer, in exchange for government approval of a subdivision, is not considered a gift. A gift must also be complete and irrevocable, without strings or contingencies.

Appraising Your Property

For tax deductions on gifts worth more than $5,000 (other than cash and publicly traded securities), landowners must obtain a qualified appraisal by a qualified appraiser. You should consult with a professional appraiser who has direct experience with charitable gifts or easements. Texas Land Conservancy (TLC) cannot provide the appraisal but can provide you with a list of qualified appraisers upon request. The appraisal cost is a necessary expense if you wish to pursue a charitable tax deduction.

Contribution Value

Contribution value is the difference of the total market value of your property and the appraised value of your property with a conservation easement. This is the amount that is considered your charitable donation and is, thereby, tax deductible.

Example:

A 500 acre property, which is valued at $10,000 per acre, has a market value of $5,000,000.

By placing a conservation easement on the property the market value is reduced to $7000/acre or $3,500,000

Therefore, there is a charitable contribution of $1,500,000. The value of the conservation easement as a charitable contribution is 30% of the before-market value. A reduction of 30% of your property’s value is a good rule of thumb for rural properties. Properties closer to metropolitan areas or those which have a higher potential for development, may have a greater reduction in value.

How an Easement Deduction Works

In our example, the value of the charitable contribution generated through the donation of the conservation easement is $1,500,000. Let’s assume that the landowner’s annual AGI is $250,000, which remains constant. The deduction resulting from the easement is as follows: (50 percent of $250,000 = $125,000). The actual tax reduction is a function of your income tax bracket.

Deducting the Cost of Your Easement

Some of the costs incurred in making a charitable contribution are also deductible. Fees and costs associated with compilation of the Baseline Documentation Report can generally be deducted as business expenses if, in combination with other miscellaneous deductions, they exceed 2% of your adjusted gross income. Any cash or securities given to endow stewardship of a conserved property are considered charitable contributions.

Estate Tax – Succession Planning

Conservation easements can be a useful estate planning tool to reduce estate tax liability and allow ranches to remain in the family. Federal estate taxes are based on the fair market value of the property at the time of the landowner’s death, not the original purchase price or current use value. This can be a significant and potentially debilitating tax burden for farm and ranch families whose land values have appreciated over time, particularly if the appreciated value is due largely to increased development value.

Q: What kind of properties qualify for a conservation easement?

A: Any property conserved by TLC must have a clear conservation purpose and consequently result in public benefit (this does not mean that the land has to be open to public use). In general, TLC will consider conservation easements on land that meets one or more of the following conservation purposes, as defined by the Internal Revenue Code Section 170(h)(4)(A):

*The protection of a relatively natural habitat of fish, wildlife, or plants, or similar ecosystem;

*The preservation of certain open space (including farmland and forest land); or

*The preservation of a historically important land area or a certified historic structure;

*The preservation of land areas for outdoor recreation by, or the education of, the general public.

In general, a property must have significant natural resources and conservation value related to TLC’s mission to be considered for a conservation easement.

Q: Do Conservation Easements allow public access on my property?

A: Conservation easements do not require public access. They also do not change ownership or control of a property, prevent use or future sale of the property, or necessarily prohibit all future development of the property. If an easement donor does wish public access for educational or environmental recreation, the easement can be written to allow for this; and TLC can help you facilitate these kinds of activities.

Q: How long does an easement last?

A: Conservation easements are permanent. A property under conservation easement may be sold or inherited, but future owners of the land must follow the terms of the easement. Only permanent conservation easements can confer tax benefits to the donor.

Q: What restrictions are contained in a conservation easement?

A: Each easement is tailored to fit the needs of the landowner/donor and the conservation goals of the easement holder (TLC). The only rule is that every easement must be consistent with all applicable laws. Typical restrictions eliminate commercial use, industrial uses, and surface mining. They also limit subdivision, roads, homes, and other structures. An easement might prohibit all future development, or it might allow a certain amount of development that will not damage the natural value.

Q: Will a conservation easement result in the loss of my control over the management of my land?

A: Land use restrictions found in TLC’s conservation easements put limitations on future development of the property in order to retain the land’s natural and scenic character. As the landowner, you give up some development and use rights but reserve the rights you need to be able to farm, ranch, hunt, build a second home, etc. The terms of TLC’s conservation easements are unique to each agreement and are designed to have minimal effect on the day-to-day management decisions of the landowner.

Q: Can an easement be changed?

A: The short answer is yes, but only under very specific circumstances and for very good reasons. The purpose of a conservation easement is to protect property in perpetuity. Forever is a long time, however, and there are circumstances when an easement may need to be amended because of an extraordinary circumstances. In such cases, TLC’s Board of Directors must approve any proposed amendments. In general, an easement will only be amended if such a change will result in increased protection and conservation value of the property.

Q: After I donate an easement, what relationship do I have with TLC?

A: As the easement holder, TLC is responsible for the perpetual enforcement of the restrictions laid out in the easement document. The monitoring and enforcement of the terms of the easement are a cooperative effort between the owner and TLC. A member of our stewardship staff will pay you an annual visit during which they will tour the property and prepare a written report based on the current condition of the property. Usually, you would join our staff member on that property tour. Should a monitoring visit uncover a violation of the terms of the easement, TLC will follow its internal policies in order to work with you to correct the problem. Regular communication between the donor and TLC typically means that problems can be solved simply. Very rarely, TLC may take legal action to correct a violation.

Q: Does a conservation easement protect me from condemnation or eminent domain?

A: Unfortunately, no. A conservation easement cannot protect your land from a condemnation claim. Protecting your land for conservation, however, has proved a useful tool for landowners who wish to protest condemnation claims. Read more about your rights as a landowners in the Attorney General’s Texas Landowner’s Bill of Rights.

Q: If I donate an easement to TLC, will it ever be transferred to the government or another organization?

A: TLC is a private nonprofit corporation. We are not affiliated with the federal government, the state, or any local government branch. In the unlikely event that TLC should cease to exist (something we protect against by maintaining a sizeable endowment), your easement would automatically transfer to another nonprofit organization that has experience with conservation easements.

Q: Is there any cost to me in placing my property under conservation easement?

A: Yes. There are some costs accrued by the landowner in placing a conservation easement on a property. We will be happy to discuss these specifics with you any time. Please check out our Step by Step Easement Process for each step in the process and whether there is a cost associated with it. Easement costs may include legal fees, survey (if not currently available), appraisal (if the landowner intends to take a tax deduction), baseline documentation report, title commitment, and stewardship and legal defense fund donation. The costs associated with a conservation easement ensure that we are able to protect your land in partnership with you and subsequent landowners. A promise to protect land forever means we carefully steward our funding to ensure that we are a healthy, viable, organization in perpetuity.