Harwich Conservation Trust - Conservation Restriction

Conservation restrictions have helped thousands of families protect millions of acres of open space across the U.S. With a conservation restriction, you permanently protect your land without giving up ownership. You continue to live on it and use it, and can sell it or pass it on to heirs.

What’s more, you can reduce future estate and income taxes that could otherwise rob your children of their legacy, and result in the destruction of one more beautiful piece of land.

HOW DOES A CONSERVATION RESTRICTION WORK?

A conservation restriction is a voluntary, legal agreement between a landowner and a land trust, such as the Harwich Conservation Trust, or a government agency, that limits a property’s uses in order to protect its conservation values.

When you own land, you also hold many rights associated with it, such as the right to build structures. When you donate a conservation restriction, you agree to modify or give up some of those rights. For example, you might give up the right to build more houses, while retaining the right to keep a view open or create gardens. Future owners also will be bound by the terms of the agreement.

The conservation restriction (called a “conservation easement” in some states) is drafted in a way to protect critical open space resources and meet the financial and personal needs of the landowner. In some cases, a conservation restriction may apply to just a portion of the property, leaving the option of development open for the remaining part. Most restrictions are intended to be permanent.

The holder of the restriction takes on the responsibility and legal right to enforce the agreement. If a future owner or someone else violates the agreement (perhaps by erecting a building the restriction doesn’t allow) the holder will work to correct the violation.

QUALIFYING FOR A FEDERAL INCOME TAX DEDUCTION

The value of a conservation restriction can be used as a charitable gift and deducted from federal income tax (and some state income taxes). The value of the restriction is the difference between the land’s value with the restriction and its value as unrestricted. If a property is worth $200,000 unrestricted, for example, and a restriction that precludes further development is placed on it that drops its value to $50,000, the value of the donation is $150,000. In general, the greater the land’s potential to become a residential subdivision, the greater the charitable deduction will be if this potential is limited by the restriction.

In order to qualify, a restriction must meet federal requirements--in essence, it must provide public benefit by permanently protecting important conservation resources. However, a restriction does not have to cover all of the property, prohibit all use or development, and does not have to allow public access.

OTHER FINANCIAL ADVANTAGES

Because a conservation restriction typically lowers a property’s fair market value, it can also lower property taxes. The Harwich Assessor's Office can indicate to interested landowners how a proposed conservation restriction may affect a parcel's assessed value. Again, the more buildable the parcel, the greater the property tax savings from a restriction. A buildable lot placed under restriction will secure an 80% property tax reduction.

Owners of highly valued property may also use the restriction to lower the value of their estate for estate tax (or inheritance tax) planning. The combined federal and state estate tax can be as high as 55%, sometimes forcing children to sell the property simply to pay off the “death taxes”. A conservation restriction can lower the estate tax, and perhaps provide the way for heirs to retain title to a cherished family asset. Estate planning with the aid of professional advisors is critical.

CONSERVATION RESTRICTIONS IN HARWICH

Since state law authorized restrictions in 1969, several properties in Harwich have been preserved by this means. In 1991, the Town adopted a policy to encourage the use of conservation restrictions, offering property tax relief.

These restricted parcels include part of the Punkhorn area, the oldest cranberry bog (c. 1845) in Harwich, and a scenic view along Pleasant Bay. The Harwich Conservation Trust holds these conservation restrictions. The Trust provides environmental assistance to landowners interested in gifts of land or restrictions.

YOUR NEXT STEP

If you are interested in learning more about how you can keep your property, preserve its resources, and generate tax advantages for you and your family, then learn more about the land protection options available to you:

Contact the Harwich Conservation Trust. The Trust can provide information and advice in a confidential and convenient manner. Please call 508-432-3997 or The Compact of Cape Cod Conservation Trusts at 508-362-3422 or email: compactm@cape.com.

Talk with your own legal and financial advisors. You should make decisions affecting the ownership and value of your property only after careful consideration and professional consultation.

Read further. Publications available include the Town of Harwich Conservation Restriction Program (from Town Hall); The Massachusetts Conservation Restriction Handbook (from Mass. Div. of Conservation Services, tel. 617-626-1012); and, The Conservation Easement Handbook (from the Land Trust Alliance in Washington DC, tel. 202-638-4725 or www.lta.org.)

This link is designed to provide accurate, authoritative information in regard to the subject matter covered. The publisher is not engaged in rendering legal or accounting services. Please rely on your own financial advisors. Portions used with permission from the Land Trust Alliance.