Who Pays Taxes on Easement Land?

In most situations, a property owner who grants an easement on his land continues to be responsible for the taxes and assessments charged to that land. However, it may be possible to negotiate a cost sharing arrangement, especially if the purchaser of the easement is a private party instead of a government entity.

An easement is a grant by a property owner of the right to use, share and/or carry out certain activities on some part of his land. It is not a transfer of title to the land or the responsibility to pay property taxes. While the basis of some easements is an informal understanding between the parties, most are formally delineated in an easement agreement. This legal document specifies the exact location of the parcel to be shared and what activities are permissable on that parcel.

Easements fall into two major categories: public and private. Private easements are more likely than public easements to include property tax-sharing agreements. Public easements are available to governments, utilities or other public entities to protect or benefit the community. For example, municipalities seek easements to expand local roads or build sidewalks that abut people's lawns. Utilities, like power companies, often need easements to erect overhead lines or dig underground cables. Neighbors who wish to share a common amenity, like a driveway, negotiate private easements.

Property taxes are not the only financial obligation associated with owning real estate. Often, the costs of maintaining and insuring the land are considerable, especially when it includes structures like culverts or storage buildings in need of ongoing repair. An owner who wants the easement beneficiary to bear part of these costs must negotiate this as part of the easement agreement. The agreement may also indicate what recourse is available to the owner if the easement holder fails to pay.

A conservation easement is a special type of land use restriction designed to preserve open space and/or natural resources. By meeting certain requirements set by the Internal Revenue Service, or IRS, the owner may qualify for a variety of federal tax incentives and state or local property tax reductions. The IRS criteria include granting the easement, solely for conservation purposes, to a government entity or recognized land trust; making the easement agreement permanent and irrevocable; and using the easement to prohibit activities that facilitate development, like excavation or road construction.