February 24, 2025
- Extinguishing some or all of the development rights for a parcel of land through a conservation easement may substantially reduce the value of the land for estate tax purposes, thus reducing estate taxes.
- In addition, Section 2031(c) of the Internal Revenue Code provides an estate tax exclusion from the gross estate of up to 40% of the easement-encumbered value of the land protected by a qualified conservation easement. The exclusion is capped at $500,000 and is reduced if the conservation easement reduced the land’s value by less than 30% at the time of the contribution. To qualify the easement must prohibit all but “de minimis commercial recreational use” of the property, and other requirements must be met. Consult your tax advisor about this exclusion. However, since the lifetime gift/estate tax exemption is $13.99 millionin 2025, many estates will not be subject to such taxation.
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