Understanding the MET Easement Program at the Heart of Green Hill Farm Dispute

One of the largest concerns of Sharpsburg Mayor Russ Weaver is Green Hill Farm’s compliance with the MET easement. But what is the MET easement and how does it work? Landowners in Maryland have the opportunity to protect their property’s natural, agricultural, or historic features while potentially realizing significant financial benefits through the Maryland Environmental Trust’s (MET) Easement Program. This program allows individuals to voluntarily place restrictions on their land use through a conservation easement, a legal agreement that is recorded and binds future owners of the property. The MET, part of the Maryland Department of Natural Resources, accepts offers of conservation easements on a case-by-case basis, focusing on significant rural properties and exceptional urban properties, particularly those that could offer public access.

The process of donating a conservation easement typically involves several steps, beginning with a landowner contemplating their long-term property goals and consulting with advisors. Interested individuals should contact the MET Easement Program Team to discuss their goals and property eligibility. Following initial discussions, MET staff will visit the property to document its resources and assess its values, such as wildlife habitat or historic structures, and will research local zoning and planning information. The terms of the easement are then discussed and drafted, with MET’s legal counsel reviewing the document. Landowners intending to claim federal tax benefits will need to obtain a qualified appraisal to determine the easement’s value. Existing liens on the property must be subordinated to the easement. The easement then proceeds through review and approval by the MET Board of Trustees and the Maryland Board of Public Works before being recorded in county land records. The entire process can take anywhere from five months to a year, depending on its complexity. Following the completion of the easement donation, landowners are encouraged to consider a contribution to MET’s Stewardship Fund, which supports the ongoing monitoring and stewardship of protected properties.

The primary financial incentive driving participation in the Maryland Environmental Trust’s (MET) Easement Program is not direct revenue, but rather significant tax advantages. By donating a conservation easement, landowners are eligible for substantial federal and state income tax deductions and credits, as well as relief from property and estate taxes. The program is structured as a land-use restriction donation that reduces the appraised value of the property for tax purposes, lowering the owner’s liabilities and costs. Crucially, the easement itself does not generate any income or recurring cash revenue for the landowner; instead, it offers a robust mechanism for long-term wealth and land preservation planning through tax benefits.

One of the primary benefits of donating a conservation easement is the potential for significant tax advantages. Landowners may be eligible for federal income tax deductions, which can be deducted from adjusted gross income. For qualified farmers and ranchers, the deduction can be up to 100% of their adjusted gross income. The value of the donation is determined by a qualified appraiser and is generally equal to the property’s value before the easement minus its value after the restrictions are in place. To claim this deduction, landowners must file IRS Form 8283 and provide supporting documentation, including an appraisal if the donation exceeds $500,000.

In addition to federal benefits, Maryland offers a state income tax credit for conservation easement donations to the MET, the Maryland Department of Natural Resources, or the Maryland Agricultural Land Preservation Foundation. The maximum credit is $5,000 per individual or pass-through entity annually, with the remainder of the credit, based on the appraised value, potentially carried forward for up to 15 years, totaling a maximum of $80,000. This credit cannot be claimed in conjunction with a state income tax deduction for the same easement. Both individuals and pass-through entities use specific forms to claim these credits, and obtaining a qualified appraiser is necessary if a state income tax credit is to be claimed.

Furthermore, conservation easements can offer substantial benefits related to estate taxes. By limiting development potential, easements reduce the appraised value of the land, thereby lowering the taxable estate. Federal law also provides an estate tax exclusion for certain land subject to a donated easement, partially shielding it from estate taxes. Maryland also provides an estate tax benefit by lowering the appraised value of land with a conservation easement.

Landowners who donate an easement to the MET or the Department of Natural Resources may also qualify for a property tax credit. For 15 years from the date of donation, there is no property tax on land under a donated MET easement. This credit does not apply to residential improvements or at least one acre surrounding them. After this 15-year period, unimproved land under a donated easement will be assessed at the highest agricultural rate, even if not actively farmed, provided it’s not within the restricted area around residential improvements.

It is important to note that while landowners retain ownership and can continue to live on, farm, or sell their property, the conservation easement imposes restrictions on future uses. These restrictions are tailored to the specific property and landowner’s goals and are legally binding on all subsequent owners. Easements do not typically grant public access unless specifically agreed upon by the landowner. While easements protect land from condemnation by local and state governments, federal condemnation is still a possibility, though federal and state agencies typically consult with MET regarding easement lands. Landowners are strongly advised to consult with tax professionals and legal counsel to fully understand how donating a conservation easement may affect their individual financial and estate planning.

Information regarding Green Hill Farm’s restrictions and compliance with the MET easement are available in our previous coverage. According to the owner Erin Moshier, the MET easement was setup by her parents, and she recieves no income tax credit or payments from the program.

More information on MET is available on the state website.

Article by Ken Buckler, based upon information from the Maryland Department of Natural Resources.

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