THE NEWS IS OUT AGAIN – Loudoun County remains near the top of the list as one of the fastest growing counties in the nation. While this is good news for business owners and developers, it instills terror in a segment of our population who wish to save the rural nature of our community.

Landowners who wish to preserve their land and prevent development can utilize an open space easement. There are several local organizations who can hold the easement, which restricts the use of the property in perpetuity (i.e., forever). There are significant income tax advantages for placing this type of easement on the property, but make no mistake about the fact that you are giving up certain rights that permanently impact what you can do with the property in the future.

The Federal tax law allows a landowner to take a charitable deduction for the decrease in market value of the property once the easement restrictions are placed on it. Say, for example, that you own a tract of land that comprises several different parcels, each one of which could be further subdivided under the current zoning laws. If you combine all the parcels under one easement, which allows for no subdivisions, you have given up the right to sell the property for its "highest and best use" as smaller parcels. The charitable deduction is the difference between the value of the tract of land combined as one parcel, versus the higher value of the separate smaller parcels that would have been available without the easement.

The tax savings from placing an open space easement on your property comes from a charitable deduction from your Federal and State income taxes, an income tax credit available from the State of Virginia for a portion of the deduction, as well as a Federal estate tax savings resulting from the reduced valuation of property in your estate. In addition, once the property is placed in easement, it qualifies for the reduced "land use" real estate tax rates.

The open space easement rules are complex and anyone who wishes to consider utilizing this type of an easement should seek professional help. However, for those who currently own rural real estate, or those who wish to acquire it, the potential tax savings from this type of transaction can provide an incentive to preserve the land for future generations.