Donating a conservation easement to a group such as a local land trust can provide a significant income tax deduction with no out-of-pocket expense. Suppose, for example, you own a vacation home that sits on a large parcel of land. The area has seen some condo development but you’d like your property to remain as open space.
You could donate an easement to a local preservation group. The easement might permit your vacation home to remain on the property but prohibit any future development there. That restriction would be in perpetuity, binding on future owners.
An appraiser could provide valuations, before and after the donation. If the appraisal shows that the property is worth $200,000 less, without the development rights, you could take a $200,000 income tax deduction for making a charitable contribution to the land trust.
A recently-passed federal law allows charitable deductions for easement donations to be as much as 50 percent of the donor’s adjusted gross income (AGI); deductions you can’t use right away can be spread over the next 15 years. Those provisions are in effect for easements donated through the end of 2009.
