Conservation Easements FAQs:

Why are we required to have more than one appraisal on the same property? There are many types of appraisals that are used for various reasons. For example, those who are considering a conservation easement may need a Restricted Appraisal for the beginning of negotiations. Later, a Conventional Conservation Easement Appraisal is often needed to apply for state and/or federal funding. The conventional report is more detailed than the restricted report. In addition, if the landowner donates part or all of the easement and is taking a tax deduction, they will need an IRS Conservation Easement Appraisal Report that is specific to the IRS regulations. As mentioned previously, this type of report is more extensive and more involved than a conventional report. 

For an IRS Conservation Easement Report, why must my relatives’ nearby properties be appraised?  The Internal Revenue Service requires that the appraiser consider Enhancement Parcels which refers to properties owned by family members that could possibly have a change in value due to the conservation easement. For example, if John Doe puts a 50-acre conservation easement on his property, his parents’ property next door could increase in value due to the enhancement of bordering a property that will never be developed. In laymen’s terms, any additional properties nearby that belong to the landowner, their parents, grandparents, siblings, aunts/uncles, and/or first cousins must be considered and possibly appraised. Please refer to the following IRS publications for further details. 

1334039.pdf (irs.gov) (Enhancement Parcels)

https://www.irs.gov/pub/irs-soi/17resconlooney.pdf

https://www.irs.gov/pub/irs-pdf/p5464.pdf