There are three major expenses involved in donating a conservation easement. They are:
In order for you to take a tax deduction for your federal tax return, the IRS requires that you have an appraisal done which provides you with two values. (1) Fair market value (the value if you were able to sell the property today at its highest and best use); and (2) The value of the property if it were to stay strictly as farm and/or natural lands. The appraisal costs varies depending upon the property; however, the average is about $1,500.The cost of the appraisal is not treated as part of the charitable contribution. However, fees paid to determine the value of the easement donation can be claimed by the donor (under Section 212 of the Internal Revenue Code) to the extent that they are other miscellaneous deductions exceed the 2% gross income limitation. This can help offset the appraisal cost.
If no tax deduction is being sought, you can eliminate this expenditure.
Contribution to the Farm & Natural Lands Trust
In order for the Trust to be an effective steward of the lands that are preserved, we develop a conservation easement agreement and baseline document for each property. At the time that you would authorize us to continue with your easement, we ask for a contribution that will be used to cover the costs associated with this stewardship role. We will request of you a contribution of $500 or more as our costs can reach $4,000 for a typical easement.Part of our stewardship role also includes monitoring the property annually to insure the easement objectives are being met. As time passes, we often must address issues that arise relative to the easement agreement. We ask landowners to help cover these costs by contributing to our Land Stewardship Endowment Fund after the easement agreement is completed and filed. We will recommend a contribution amount based on the size of the property and number of the building envelopes. This contribution can be paid annually over a period of up to 10 years.
One or both of these provisions can be waived at the discretion of the board of directors of the Farm & Natural Lands Trust.
Legal and accounting costs
It is always a good idea to talk to your lawyer and accountant when making a decision such as this. These costs would depend solely on your use of these professionals.