April 28, 2023 2:43 am

Fix Your Conservation Easement Deed Now or Never

A conservation easement donated to charity gives the donor a charitable contribution deduction. But to qualify, the easement must meet certain conditions, including that it be in perpetuity (forever). The ability to make changes in the property donation can kill a potential deduction. Fortunately, SECURE Act 2.0 spelled out safe harbor deed language for the extinguishment and boundary line adjustment clauses for a conservation easement and donors can use this to ensure their donations are qualified. However, deeds must reflect the acceptable language within a set time limit. The IRS specified that this must be done by July 24, 2023 (Notice 2023-30). Here’s what to do:

  • Amend any deed that doesn’t reflect the correct language with respect to any extinguishment and boundary line adjustment clauses. Use the clauses in Notice 2023-30 for this purpose.
  • Have the amended deed signed by the donor and the donee (the charity) and record it on or before July 24, 2023.
  • Be sure the amendment is treated as effective as of the date of the recording of the original easement.
Tax Glossary

Capital expenses

Costs that are not currently deductible and that are added to the basis of property. A capital expense generally increases the value of property. When added to depreciable property, the cost is deductible over the life of the asset.

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