Section 170(h) and Conservation Easements 

Section 170(h) of the U.S. Internal Revenue Code defines a charitable conservation easement. This law, which was introduced in 1980, has played a significant role in encouraging landowners to preserve their properties for the public good, by treating land under conservation easements as charitable contributions. 

Policy Reasons for Section 170(h) and Conservation Easements 

The key policy reason behind the enactment of Section 170(h) and conservation easements was the preservation of natural resources and cultural heritage. Congress enacted this specific carve-out for charitable conservation easements to preserve green spaces and to recognize that conservation easements play an important role in preservation efforts​​. The Senate’s description of the new legislation stated: “The committee believes that the preservation of our country’s natural resources and cultural heritage is important, and the committee recognizes that conservation easements now play an important role in preservation efforts”​

History of Section 170(h) and Conservation Easements 

Section 170(h) of the United States tax code was enacted in 1980 as part of an effort to encourage the preservation of natural resources and cultural heritage. Congress believed that the preservation of our country’s natural resources and cultural heritage was important, and recognized that conservation easements now played an important role in preservation efforts

The charitable conservation easement, defined in Section 170(h), was added to the Internal Revenue Code in 1980, and was later interpreted by Treasury Regulations added in 1986. It was designed to incentivize landowners to donate land to a qualified organization for conservation purposes. The donation of a conservation easement allows the landowner to claim a tax deduction for the value of the easement, as determined by a qualified appraiser​2​​3​​4​.

This provision has been adjusted several times throughout the years. In 2006, the Pension Protection Act amended sections 170(f) and 170(h) to expand the tax benefits of donating a voluntary conservation agreement, making it easier for average Americans, including working family farmers and ranchers, to donate land​5​​6​.

In 2017, the Internal Revenue Service (IRS) added certain conservation easement transactions to its “listed transactions”. This was in response to concerns about potential abuses of tax benefits associated with conservation easements. Listed transactions are certain tax  transactions identified by the IRS that taxpayers must disclose on their tax returns. This increased scrutiny and the requirement of additional reporting is controversial and has been heavily critized as IRS overreaching, particularly from those involved in the conservation community​7​​8​​9​​10​.

In 2023, the Consolidated Appropriations Act brought further changes to Section 170(h), including caps on qualified contributions and safe harbors from the IRS’s attacks on conservation easement deeds.

It’s important to note that despite some criticism, conservation easements continue to play a critical role in preserving our nation’s resources. As of 2023, approximately 40 million acres have been preserved by conservation easements.