Conservation Restrictions

The Conservation Restriction (CR) is one of the most versatile tools available to Massachusetts landowners wishing to preserve their land. At its core, the CR is a landowner’s voluntary agreement to restrict development of their land. It is a contract between a property owner (the grantor) and a conservation entity (the grantee) designed to protect the important natural attributes of the land by tailoring what kinds of uses or development (if any) will be allowed to take place in the future. The grantee entity agrees to make sure that the provisions of the CR are not violated.

The CR document is approved by the Select Board of the town and the state Secretary of Environmental Affairs, and is then recorded in the registry of deeds. Its protection lasts forever. Current and future landowners continue to own and enjoy the private property subject to the provisions of the CR.

There are often substantial tax benefits to the landowner for donating a CR. By curtailing the right to future development, the CR reduces the value of the land asset in the landowner’s estate. In addition, the property owner is entitled to a federal income tax deduction equal to the value relinquished by the gift, as determined by an appraisal. On the local level, the gift of a CR often reduces property taxes when portions of a property are rendered unbuildable. Finally, when a parcel of land encumbered with a CR is appraised for purposes of determining its value as an asset in the estate, the tax code authorizes an executor to deduct up to an additional 40% of the value.

The CR must include a description of how the public will benefit from the restriction. This demonstration of public benefit ranges from decreasing residential development density, safeguarding roadside vistas, wildlife habitat, wetland systems and drinking water supplies, to actual permission to enter onto the private land for supervised nature study, education, or other passive forms of outdoor enjoyment.

Changes in federal tax rules over the past decade have made it easier for a landowner to take full advantage of the deduction for the gift. A common challenge in places of very high property values, such as Martha’s Vineyard, was that the classic “land rich, cash poor” family would be unable to ever utilize the full deduction. Previous rules allowed an annual deduction up to 30% of AGI with just a five-year carryover period, whereas under the new rules a taxpayer may deduct up to 50% of adjusted gross income (AGI) per year for up to 15 years.