Conservation Easements and Your NC Horse Farm: Taxes, Rules, and Resale

A conservation easement is a permanent, recorded restriction that limits development on your land while you keep owning, using, and selling it. On a North Carolina horse farm it can produce federal and state tax benefits and keep the land in agriculture, but it also gives up the land's development value for good. It fits owners who want the farm to stay a farm, and buyers should read any existing easement before making an offer.

What an easement is, in IRS terms

IRS Publication 526 calls a conservation easement a "qualified real property interest": a restriction, granted in perpetuity, on how the property can be used. To support a deduction, it must go to a qualified organization (a government unit or a publicly supported charity such as a land trust) that has the resources to monitor and enforce it. The organization must also have documents, such as maps and photographs, that establish the property's condition at the time of the gift.

The easement must serve a conservation purpose. For most horse farms, the relevant one is preserving open space, including farmland, where it yields a significant public benefit, either for scenic enjoyment by the public or under a clearly defined government conservation policy.

Every easement is negotiated. Under state law, an agricultural conservation easement restricts residential, commercial, and industrial development so the land stays available for agriculture. The details, such as where a future house, barn, or arena can go, are written into each deed. That's where horse owners need to pay attention.

Do horses count as agriculture?

For North Carolina's state farmland preservation program, yes, and that includes boarding. The NC Agricultural Development and Farmland Preservation (ADFP) Trust Fund defines agricultural production to include raising and training livestock, including horses, and adds:

"The raising, management, care, and training of horses includes the boarding of horses"

NCDA&CS, ADFP Trust Fund Application Guidelines for Agricultural Conservation Easements

Private land trusts write their own terms. Before you sign, make sure the easement allows the horse uses you plan, such as boarding, lessons, a covered arena, or more run-in sheds.

Federal tax rules

These figures come from IRS Publication 526 for 2025 returns. Tax law changes often, so confirm the current rules with a CPA.

• General limit. The deduction for a qualified conservation contribution is limited to 50 percent of adjusted gross income (AGI), minus other charitable deductions.
• Farmers and ranchers. If more than 50 percent of your gross income comes from farming, the limit rises to 100 percent of AGI. For land used in agriculture or livestock production, the easement must require that the land remain available for that production.
• Carryover. Unused amounts carry forward much longer than other gifts.

"A carryover of a qualified conservation contribution can be carried forward for 15 years."

IRS, Publication 526: Charitable Contributions

• Appraisal. A deduction over $5,000 requires a qualified appraisal from a qualified appraiser and Form 8283, Section B.
• Mortgages. Under Treasury Regulation 1.170A-14, no deduction is allowed for an easement on mortgaged property unless the lender subordinates its rights to the land trust's right to enforce the easement. Talk to your lender early.
• Partnerships. Pub 526 describes a rule that disallows conservation deductions by partnerships and S corporations that exceed 2.5 times the members' relevant basis. If your farm is held in an LLC taxed as a partnership, ask your CPA how it applies.

A hypothetical example. Say an appraiser values an easement at $400,000 and the owner's AGI is $200,000 each year, with no other charitable gifts. Under the 50 percent limit, the owner deducts $100,000 a year and uses the full amount over four years, well inside the 15-year window. If the same owner qualifies as a farmer, the 100 percent limit allows $200,000 a year, so the deduction is used in two years. Your numbers will differ. A CPA should run them.

The North Carolina credit is back

North Carolina has reenacted its state conservation tax credit, now codified as G.S. 105-153.11, for donations made from Jan. 1, 2025, until the credit expires for donations made on or after Jan. 1, 2031. Key terms as of October 2026:

• The credit equals 25 percent of the fair market value of a qualified donation.
• Qualifying uses include farmland or forestland preservation, fish or wildlife conservation, and public trails, among others.
• The donation must go to the state, a local government, or a qualified conservation organization.
• An individual's credit can't exceed $250,000, or $500,000 on a joint return.
• You apply to the Department of Revenue by April 15 of the year after the donation, with a certification from the Department of Natural and Cultural Resources and an appraisal report.
• The credit is taken for a later tax year, not the year of the gift. Unused credit carries forward five years.
• Total credits statewide are capped at $5 million per year, with $3.25 million prioritized for farmland and forestland donations. If requests exceed the cap, credits are prorated.

In the example above, a $400,000 easement would support a credit request of $100,000, subject to proration.

Present-use value and easements

Some horse farms qualify to be taxed at present-use value (PUV) rather than market value. Under G.S. 105-277.3, agricultural land generally needs at least 10 acres in actual production and average gross income of at least $1,000 over the three prior years, plus an ownership test such as being the owner's residence. If land loses eligibility, G.S. 105-277.4 makes the deferred taxes for the preceding three fiscal years due.

Easements change that picture in a useful way. The statute's conservation exception lets PUV land under a qualifying conservation easement keep its PUV status without meeting the production and income requirements, as long as the owner received no more than 75 percent of the donated interest's value in compensation. A later sale does not end that eligibility while the easement remains. The exception covers only the part of the property under the easement.

For buyers, this is a due diligence item. Ask the county tax office before closing whether the farm is in PUV, what deferred taxes are on record, and what you would need to do to keep it qualified.

Voluntary Agricultural Districts: lighter protection

A Voluntary Agricultural District (VAD) is not an easement, but it offers some protection with less commitment. Under Article 61 of Chapter 106 of the General Statutes:

• No public agency can begin condemning or rezoning qualifying farmland in a district until an agricultural advisory board holds a public hearing, and the agency must then wait 120 days after the board submits its findings.
• Counties must flag nearby land in the land records.

"All counties shall require that land records include some form of notice reasonably calculated to alert a person researching the title of a particular tract that such tract is located within one-half mile of the property line of any tract of land enrolled in a voluntary agricultural district."

NC General Assembly, Chapter 106, Article 61

• A county or city may hold water and sewer assessments in abeyance for farms until the property connects.
• An Enhanced VAD agreement is irrevocable for at least 10 years and then automatically renews for a three-year term unless either side gives notice. Farms under one can earn up to 25 percent of gross sales from nonfarm products and still count as a bona fide farm, and they qualify for the higher cost-share rate under the state's Agriculture Cost Share Program.

A standard VAD agreement can be revoked by written notice, which ends qualifying farm status. Ask your county whether it has a VAD ordinance and how to enroll.

Why this comes up around Charlotte

NCDA&CS cites American Farmland Trust projections that North Carolina will lose 1.2 million acres of farmland to development by 2040, second only to Texas. Two Charlotte-area counties rank in the national top 50: Union at 23rd and Iredell at 38th. For horse farm owners in Union County and Iredell County, that projection is a reason to think about long-term protection now. An easement is the strongest tool to keep a specific farm open. A VAD is a lighter one.

Who holds easements in the region

• Catawba Lands Conservancy works in Catawba, Gaston, Iredell, Lincoln, Mecklenburg, and Union counties. It reports conserving more than 200 properties totaling nearly 18,000 acres, including farmland.
• Conserving Carolina serves Polk, Henderson, and Transylvania counties, parts of Rutherford and surrounding counties, and the Landrum area of South Carolina. That covers the Tryon, Columbus, and Mill Spring horse country.
• NC ADFP Trust Fund (NCDA&CS) funds agricultural conservation easements, but only nonprofit conservation organizations and county governments can apply. Landowners take part by partnering with one of them. The fund also has an incentive program that helps cover transaction costs for donated agricultural easements.

Resale and financing

An easement runs with the land forever, so it shapes who will buy the farm later. Before you donate or buy:

1. Read the recorded deed of easement and the baseline documentation, not a summary.
2. Map the reserved building areas and any limits on new barns, arenas, paving, or subdivision.
3. Ask the land trust how monitoring visits work and how long approvals for new structures take.
4. Have a real estate attorney review the easement with the title work.
5. Tell your lender up front. Donors need lender subordination for the deduction, and buyers need an appraisal that values the land as restricted.
6. Check the PUV status and any deferred taxes with the county.

If you're buying raw land to build a farm, our guide to buying land for a horse farm in North Carolina and land for horses guide cover site selection. If you're selling a farm that carries an easement, see our guide to selling a horse farm.

This is general information, not legal or tax advice. If you're weighing an easement on a farm you own or plan to buy, contact us and we can talk through how it affects the property.

Sources

• IRS, Publication 526: Charitable Contributions
• Cornell Law School LII, 26 CFR 1.170A-14: Qualified conservation contributions
• NC General Assembly, G.S. 105-153.11: Credit for certain real property donations
• NC General Assembly, G.S. 105-151.12 (reenacted and recodified)
• NC General Assembly, G.S. 105-277.3: Agricultural, horticultural, and forestland classifications
• NC General Assembly, G.S. 105-277.4: Agricultural, horticultural and forestland, application and deferred taxes
• NC General Assembly, Chapter 106, Article 61: Agricultural Development and Preservation of Farmland
• NCDA&CS, Farmland Preservation Division
• NCDA&CS, ADFP Trust Fund Application Guidelines for Agricultural Conservation Easements
• Catawba Lands Conservancy, Who We Are
• Conserving Carolina, Who We Are