Conservation Easements & PDR: Tax & Market Implications

Thinking about placing a conservation easement on your land near Warrenton or selling development rights through Fauquier County’s PDR program? You are not alone. Many local landowners want to preserve farmland, plan for heirs, and still make the numbers work. In this guide, you will see how easements and PDR affect taxes, value, financing, and resale in Fauquier County so you can move forward with clarity. Let’s dive in.

Conservation easements in plain English

A conservation easement is a voluntary, recorded agreement that limits certain development rights while you keep ownership and use. It “runs with the land,” so future owners are bound by it. In Virginia, easements are commonly held by local land trusts, the Virginia Outdoors Foundation, or county governments.

How it works here

In Fauquier County, you can donate an easement to a qualified organization to protect farmland or open space. The easement terms define what you keep, like agricultural use, and what is restricted, like subdivision. The value of the gift is usually determined with a before-and-after appraisal that compares your property’s fair market value with and without the easement.

Fauquier County PDR at a glance

Fauquier County operates a Purchase of Development Rights program that pays you for development rights while keeping your land in agriculture. The county’s current published payment is $60,000 per development right. To qualify, land generally must include at least 50 contiguous acres, be actively farmed, and be zoned RA or RC. The county reports protecting more than 13,000 acres through PDR since 2002. You can review current rules on the county’s PDR page and confirm application windows with staff. (Fauquier County PDR program)

Tax benefits and tradeoffs

Your tax results depend on whether you donate an easement, sell development rights, or blend the two.

Federal charitable deduction for donations

If you donate a perpetual conservation easement to a qualified organization, you may be eligible for a federal charitable deduction for the easement’s appraised value. The IRS requires strict documentation, including a qualified appraisal and Form 8283. Limits apply to how much you can deduct each year, with more favorable rules for qualified farmers and ranchers, and carryforwards available under IRS rules. Review the substantiation details in the IRS Form 8283 instructions.

Virginia Land Preservation Tax Credit

Virginia provides a Land Preservation Tax Credit generally equal to 40 percent of the fair market value of the donated easement interest. Credits are subject to a statewide annual cap, filing deadlines, and verification for large credits. Credits are often transferable, which can help you convert some tax benefit into cash. See current rules and timelines on the Virginia Department of Taxation LPTC page.

Selling development rights and income taxes

A PDR payment is a sale of a real property interest. Proceeds are typically taxable, and your treatment depends on your basis, holding period, and structure. Some owners use a bargain sale that combines a partial sale with a partial donation. Fauquier’s site publishes the per-right price and encourages owners to consult tax advisors. Review local program details here: Fauquier County PDR program.

Estate planning benefits

Land protected by a qualified conservation easement may qualify your estate for an exclusion under IRC 2031(c). This election can exclude a portion of the remaining land value from the taxable estate, subject to limits and rules. See the procedure in the IRS Form 706 instructions.

Local property taxes and use-value assessment

Easements can reduce a property’s fair market value, which may lower land assessments for local real estate taxes. If your land is already in a use-value program for agriculture or open space, the added savings may be limited. Confirm treatment with the Commissioner of the Revenue and review Virginia’s statutory framework for use-value assessment in the Virginia Code.

Market and financing impacts in Warrenton

Understanding value, buyer demand, and lending up front helps you plan.

Value and resale

Easements reduce development potential, which usually lowers market value compared with unencumbered land. The size of the reduction varies with location, zoning, and the specific terms that remain or are restricted. Appraisers typically use a before-and-after method, and they should compare to sales of similarly encumbered properties. For methods and best practices, see NRCS’s guidance on easement appraisals (NRCS appraisal standards) and the Appraisal Institute’s resources on easement valuation (Appraisal Institute resource).

Financing and lender considerations

Lenders treat easements as title encumbrances that affect collateral. Some lenders are comfortable lending on encumbered farms with adjusted loan-to-value ratios and clear appraisals, while others are more restrictive. Expect lenders to require title clarity and, if you place an easement during an existing loan, mortgage subordination may be required. See how major investors expect lenders to analyze easements in Fannie Mae’s underwriting guidance.

Stewardship and buyer expectations

Easement holders monitor and enforce terms, and donors often fund stewardship. Buyers should understand permitted uses, building limits, and long-term obligations before they commit. State reports highlight how stewardship and conservation value reviews affect credit issuance and document language (Virginia DCR report).

Donate or sell: which path fits your goals?

Both routes preserve land. Your goals and cash flow guide the choice.

• Consider a donation if you want potential federal deductions and Virginia tax credits, and you can use or sell credits over time.
• Consider PDR if you want immediate cash at the published per-right price and are comfortable with taxable sale treatment.
• Some owners blend strategies, such as a bargain sale or a PDR combined with a smaller donation.

Step-by-step for Fauquier landowners

If you plan to donate an easement

1. Start with an initial call to a local land trust or county Agricultural Development to discuss goals and eligibility.
2. Get a preliminary read on conservation value and credit potential, especially if the credit could exceed 1 million dollars.
3. Negotiate easement terms and assemble baseline maps and documentation.
4. Order a qualified appraisal and prepare IRS Form 8283 and related substantiation. Appraisals often take months, so plan ahead.
5. Record the easement and complete Virginia LPTC filings by the statutory deadlines. Review program details on the Virginia LPTC page.

If you plan to sell development rights through PDR

1. Contact the county to confirm whether the application window is open and verify eligibility.
2. Complete the county review of acreage, zoning, and active agricultural use.
3. Undergo appraisal and confirm the per-right payment amount.
4. Close on the PDR sale and record the easement. The county will monitor going forward. Learn more on the Fauquier County PDR page.

Risks and red flags to avoid

• Overstated valuations can trigger IRS scrutiny. Work with a qualified appraiser and follow Form 8283 instructions closely.
• If you expect large Virginia credits, early coordination helps. State reviews may require changes to preserve conservation value, as described in the Virginia DCR report.
• Resolve any existing mortgages early. Many easement holders require lender subordination before closing.
• Plan for future resale. Easements can narrow the buyer pool and affect timing, so set expectations with your family and advisors.

Ready to talk local strategy?

You deserve a plan that protects your land and your bottom line. If you are weighing a donation, a PDR sale, or a blended approach in Warrenton or greater Fauquier, let’s map out next steps and your market options. Reach out to Ally Goldwater for a thoughtful, local conversation.

FAQs

What is the Fauquier County PDR program and who qualifies?

• It is a county program that pays landowners for development rights to preserve farmland; properties typically need 50 contiguous acres, active farming, and RA or RC zoning, with a published payment of $60,000 per right (confirm current details with the county).

How do Virginia Land Preservation Tax Credits work for donations?

• Virginia generally offers a 40 percent credit on the fair market value of a qualifying donated easement, subject to statewide caps, deadlines, and transfer rules outlined by the Department of Taxation.

Will a conservation easement lower my Fauquier property taxes?

• It may reduce assessed land value, especially if not already in a use-value program, but you should confirm treatment with the Commissioner of the Revenue under Virginia’s use-value framework.

Can I still get a loan on land with a conservation easement?

• Sometimes; lenders evaluate the recorded terms, appraised value, and marketability, and may require adjusted LTVs, clear title, and subordination if there is an existing mortgage.

How long does the easement or PDR process take?

• Appraisals often take months, and full easement or PDR closings can take many months to a year depending on appraisals, surveys, lender consents, and state review needs.