Colorado Conservation Easement Fees Decrease

Last week, the Colorado Division of Real Estate announced a decrease in the fees for certification of a conservation easement. The new cost of a conservation easement appraisal decreased from by $80 and a certification for land trusts and local governments came down by $1,000.

Because of previous overvalued land, which resulted in unwarranted distribution of tax credits, Colorado law now mandates that all land trusts holding easements be certified and all appraisals where a credit is requested be reviewed by the state's Division of Real Estate. The division reduced the fees from last year's amounts to ensure that smaller land trusts can afford to participate and to encourage donations.

Under conservation easements, landowners agree not to develop property that is agricultural or contains scenic vistas or wildlife habitat in exchange for receiving a state tax credit. The easement restricts the landowner to land uses that are compatible with long-term conservation and environmental values. The Colorado program is run exclusively through certification fees assessed on land trusts and the easement appraisal submissions.

The Colorado Real Estate Division reports that, as a direct result of the new law, credits claimed were cut in half - thus saving the state over $50 million.

The sale of a conservation easement is "like kind" to real estate and could qualify for eligibility as a 1031 exchange. Proceeds from the sale of a conservation easement could then be exchanged into additional land or any other investment property held for productive use. If you are contemplating a conservation easement sale, please contact 1031 Corporation for further information on how to defer taxes on that sale.