How Can a Conservation Easement Help a Farm or Ranch Landowner?April 1, 2021
In recent years farm and ranch owners and buyers have found they must consider the benefits and drawbacks of owning private property that has a conservation easement attached to it. As demand for developable land has increased, more landowners are searching for ways to keep open spaces undeveloped and protected. Conservation easements have become a tool to accomplish that goal.
In short, conservation easements have come about as a way for landowners to apply protections to private property with the aid of a conservation organization or government agency as the holder of the easement. In Montana, some of the participating organizations would include The Nature Conservancy, The Montana Land Reliance, The Rocky Mountain Elk Foundation, The Natural Resources Conservation Service, and Montana Fish, Wildlife and Parks to name a few. In exchange for giving this easement, the private landowner receives an income tax deduction or actual cash payment. Easements are for a certain term of years or may be placed on the property forever. Although most conservation easements are unique, in some way they all typically will restrict development or use of the private land to which they are attached.
The most apparent benefit of placing a conservation easement on a property would be the protection it provides to the land, water and wildlife resources of a farm or ranch. While sustainable agricultural operations would normally be allowed, a conservation easement would usually restrict domestic development and industrial development such as mining and oil exploration. In turn this action would help to protect the land, water and wildlife resources. Tax planning can be another reason to place a conservation easement on a property. Typically, an easement has a value based on the restrictions it places on the property and the property owner can receive an income tax deduction equal to that value. Also, some easements are purchased with cash from the landowner by the organization that will hold the easement, and this can be helpful financially to a farm or ranch operating on a tight budget.
The biggest disadvantage to placing a conservation easement on a property is also based on the restrictions it places on the property and how that can lower the value of that property. Often, a property with a conservation easement in place will be less desirable to a buyer and therefore make that property more difficult to sell. This is because the restrictions already placed on the property by the easement may not align with the prospective buyer’s goals for the property and because the opportunity for that buyer to place an easement of his own on the property has already been used.
In conclusion, conservation easements can be a valuable tool for buyers and owners of farm and ranch property in Montana, but they may not be for everyone. Please contact 18 Land Company if you have any questions about agricultural properties in Montana. We have farm and ranch property experts that can help you reach your land ownership goals.
At 18 Land Company our primary goal is to help people buy the property that perfectly fits them and then help them enjoy that property after the purchase. We want to alleviate some of the burdens of farm and ranch ownership by creating a great relationship with our clients during the land purchase process and to maintain that relationship by offering a full line of management services based on our extensive experience in agriculture. Please visit the Land Concierge page on our website to learn more about what 18 Land Company can do for you to make your farm or ranch ownership experience the very best it can be.
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