Determining the Value of Your Conservation Easement

What affects the value of your conservation easement and the tax benefits it might generate?

For many landowners, tax benefits are an important part of the decision to permanently give up development rights and protect their land forever. Only a certified appraiser, experienced in reviewing conservation easements, can determine the value of your easement donation. The appraiser actually completes two valuations of the property: first of the property as is, with no conservation restrictions, and second of the property with limits on development and other intensive land uses. The valuations are based on recent sales of comparable properties, restricted and unrestricted. The difference between the “before” and “after” values represents the conservation easement value; the amount that can be claimed as a charitable donation for tax purposes. Typically, the restriction that affects easement value the most is reduction or elimination of development rights, both subdivision of the property and limits on the houses and other structures you can build on it. The change in value can be significant if you are located in a high-growth area, have easy access to the property and could easily develop it under existing zoning. Easement values are higher where the local real estate market is robust, such as northern Virginia’s suburban counties, on the waterfront nearly anywhere and in parts of the Piedmont with extensive preserved land (which makes developable rural land more valuable). However, development rights exist anywhere. Other key factors that affect the value are the land use restrictions in the easement, such as limits on commercial forestry and a prohibition on mining. The latter is required by federal law to qualify the easement for charitable gift purposes. To recap, in order to accurately determine how much an easement on your property might be worth, you will need to consult with an accredited conservation easement appraiser. Todd Hochrein is president of Virginia Conservation Credit Exchangein Charlottesville, which serves as a marketplace for buying and selling Virginia Land Preservation Tax Credits generated by the donation of a qualified conservation easement.