Conservation Restriction (CR) is one of the most versatile tools
available to Massachusetts landowners wishing to preserve their land.
Recent tax code changes make it an even more appealing option for
owners of valuable real estate in places like Martha’s Vineyard.
A conservation restriction (CR) is a landowner's voluntary agreement to
restrict development of private land. It is a contract between a
property owner and a conservation entity 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 selectmen 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.
The property owner is then entitled to a federal income tax deduction
equal to the value relinquished by the gift, as determined by an
appraisal. By curtailing the right to future development, the CR gift
reduces the value of the land asset in the landowner’s estate. 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.
On the local level, the gift of a CR often reduces property taxes when
portions of a property are rendered unbuildable.
The CR includes a description of how the public will benefit from the
CR. 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.
Donating a CR on land generates a federal income tax deduction. The new
tax rules make it easier for a landowner to take full advantage of that
deduction. The taxpayer may now deduct the value of the gift up to 50%
of adjusted gross income (AGI) per year for up to 15 years. This is a
change from the old rule which allowed a deduction up to 30% of AGI
with just a five-year carryover period.