How much does a conservation easement lower a farm's price?
By whatever the uses it ended were worth, and no fixed percentage applies. Virginia law values land under a perpetual conservation easement for assessment only on the uses the easement still permits, with nothing for the uses it terminated. So the size of the drop depends on what the recorded deed gave up and what it reserved, and a licensed appraiser is the one who measures it.
The Code values eased land on what it may still be used for, and nothing else
Virginia law already states how the drop is measured, in the section written for the tax assessor. Va. Code 10.1-1011 says that when land is under a perpetual conservation or open-space easement, its fair market value for assessment is figured this way:
the fair market value of such land (i) shall be based only on uses of the land that are permitted under the terms of the easement and (ii) shall not include any value attributable to the uses or potential uses of the land that have been terminated by the easement.
Va. Code 10.1-1011
That sentence governs assessment, not a private sale, and no one can make a buyer pay by it. It does state the logic a buyer can apply to an eased farm: the land is worth what it can still be used for, and under that measure whatever the easement took away, whether a building site, a division into lots or another use the land could have been put to, counts for nothing.
Those limitations are what the price gives up. What a conservation easement is under Virginia's Conservation Easement Act has its own entry, and because every deed of easement sets its own limitations, there is no percentage that holds from one farm to the next.
Read the recorded deed for what it ended and what it reserved
The size of the reduction is found in the deed of easement, one restriction at a time. A few questions sort a deep cut from a shallow one.
Were the ended uses ever realistic?
An easement that ends building on a steep wooded hollow with no road and no house site takes away something the ground could hardly offer anyway. The same restriction on open, level frontage ends a use a buyer might have paid for.
What did the deed reserve?
Each deed sets what the landowner keeps. A reserved house site, a reserved division or continued timber harvesting are each part of what remains to be valued.
What needs the holder's approval?
Some deeds make construction, a subdivision or a timber harvest subject to the holder's review and approval. A use that survives only with an approval is read differently from one that needs none.
An appraiser measures the reduction, and the tax credit rules depend on that appraisal
Where Virginia law does call for a measured number on a donated easement is a claim for the land preservation tax credit, and it requires an appraisal to supply it.
Under Va. Code 58.1-512, for donations made on or after January 1, 2007, the credit is 40 percent of the fair market value of the land or interest in land conveyed, and that value must be substantiated by a qualified appraisal signed by a qualified appraiser licensed in Virginia. So where a credit was claimed under that text, a licensed appraiser has already put a figure on the interest given up. The recorded deed and any appraisal the donor kept are worth locating before a price is discussed, and an appraisal remains the appraiser's document, not a sale price.
Tax effects of a donation, a sale or a purchase are a tax adviser's to explain.
A real estate licensee's opinion of value on an eased farm is not an appraisal, and Va. Code 54.1-2010 A 1 says it may not be referred to as one or used in place of one. How any farm's number is reached, easement or not, is set out in how a farm is priced.
Other easements on a farm, and what else an eased sale involves
Not every recorded restriction on a farm is a conservation easement, and the price arithmetic above applies only to the uses a conservation or open-space easement actually ended.
Along the Blue Ridge Parkway, some land carries a scenic easement, which has its own answer in what a scenic easement is. A utility line or a neighbor's right of way is another kind of easement again, and each is read on its own terms.
How an easement is created, who may hold one in Virginia and how the tax credit works are covered in conservation easements explained. The market side of selling a farm under an easement is on selling a farm with a conservation easement.
Selling a farm under a recorded conservation easement?
Send the county, the acreage and the deed book reference for the easement if you have it. Lowell will read what the deed still allows before he says anything about price. No cost, no obligation.
Got it. Thank you.
We'll be in touch shortly with an honest read.
Questions this raises
Can I find out what my easement was appraised at when it was donated?
Possibly. As Virginia's land preservation tax credit statute now reads, a donation claimed for the credit must be substantiated by a qualified appraisal signed by a qualified appraiser licensed in Virginia. The donor, the donor's tax preparer or the attorney who handled the conveyance may hold a copy. That figure valued the interest given up at the time of the donation; it is not a current sale price.
Does the easement holder have to approve a sale of the farm?
The Virginia Outdoors Foundation says its stewardship includes tracking changes in ownership, and its approvals cover activities such as construction, subdivisions and timber harvesting when the easement requires them. Whether a specific deed of easement asks for notice of a sale, or anything more, is written in that deed, and an attorney reads it.
Where this page's facts come from
Every rule, office and figure above traces to one of these. Rules change; check the office before you act on one.
- Va. Code 10.1-1009, Virginia Conservation Easement Act definitions Virginia General Assembly
- Va. Code 10.1-1011, taxation of land under a conservation easement Virginia General Assembly
- Va. Code 58.1-512, land preservation tax credits Virginia General Assembly
- Va. Code 54.1-2010, exemptions from appraiser licensing Virginia General Assembly
- Protect your land: new easements Virginia Outdoors Foundation