6.3. SR 12-20-2010 - Laserfiche WebLink

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• How much will the appraisal cost and how long will it take to complete? Easement appraisals are complex by nature and landowners should question extraordinarily inexpensive or speedy appraisals. • Can the appraiser provide an independent appraisal of the value of the easement? Landowners should avoid contracting with an appraiser that is in any way related to the land, the landowner or the transaction. The IRS prohibits appraisals by immediate family members or their spouses. • Is the appraiser experienced in appraising property in the area and with similar circumstances? Landowners should feel free to ask the appraiser for references of other clients. • Is the appraiser aware of the new regulations and penalties for appraisers? Have they had to defend appraisals in front of the IRS? How does an appraiser estimate the value of a conservation easement? Typically, an appraiser determines the value of an easement by comparing the value of the property without the easement restrictions in place and the value of the property with the restrictions in place. The difference between the two is the value of the easement itself. This procedure is typically known as the "before and after approach." As a simple example: Value of the land before the conservation easement: $500,000 Value of the land after the conservation easement: $275,000 Difference =value of the conservation easement: $225,000 Proportionate value of the conservation easement: 45% Generally, a more restrictive easement will result in a higher proportionate easement value. But each parcel of land and each set of conservation restrictions are unique. Therefore, no set or average percentage of value can be attributed to the rights relinguished in an easement. What does an appraiser look at to estimate the value of a conservation easement? An appraiser will look at a variety of factors concerning both the specific property subject to the easement and the surrounding area. Relevant factors will include: • Location and character of the property, • Existing zoning regulations and other laws or contracts that affect the property, and • Development potential and future land use trends. The appraiser will need to understand the specific restrictions placed on the land and the specific rights reserved by the landowner in the conservation easement being appraised. The appraiser will also need to evaluate the easement in the context of any contiguous or other property owned by the landowner or the landowner's family and the potential of the easement to enhance the value of the other property. Any enhancement value will need to be subtracted from the amount that a landowner can take as a charitable deduction for the donation of an easement.