What is a Conservation easement?
A conservation easement is a voluntary legal agreement between a property owner and a qualified conservation organization that permanently restricts specific uses of land to protect its conservation values, such as wildlife habitat, scenic views, or agricultural purposes. The property owner retains ownership while donating development rights, creating a charitable contribution deduction equal to the reduction in property value. The deduction is limited to 50% of adjusted gross income annually, with unused amounts carried forward for 15 years. This strategy works effectively in conjunction with Tax loss harvesting to maximize overall tax benefits while preserving valuable land for future generations. As of 2025, the IRS has intensified scrutiny of syndicated conservation easement transactions (SCETs), disallowing deductions where appraisals or deed language fail to meet Section 170 requirements—especially the “protected in perpetuity” clause. The deduction remains limited to 50% of the adjusted gross income annually, with unused amounts carried forward for 15 years. However, partnerships must now provide enhanced substantiation, including third-party appraisals, deed compliance certifications, and donor intent documentation. The IRS has removed SCETs from its “Dirty Dozen” list in 2025, signaling a potential shift in enforcement priorities—but litigation and audit risk remain high for improperly structured easements.
.png){kind=small}