Are Easements Taxable?

As a property owner, you are liable to pay property taxes. However, when some of your property is subject to easement, the tax situation becomes more complex. In most instances you remain liable for paying taxes on the easement, although this is not always the case. Consult with an attorney who specializes in real estate law concerning questions on your specific circumstances.

An easement creates the legal right to use property that actually belongs to another person; it must be used in a specified manner. One example of an affirmative easement is an access road over another person's property that connects your property to the main road. An example of a negative easement is an agreement to limit the height of a fence bordering your property to prevent blocking light and air to your neighbor's property. Easements occur by contract between the owner of a property and the person obtaining the easement, or by overt action by the party obtaining the easement, with or without the permission of the rightful owner.

Adverse possession occurs when one person takes possession of property that rightfully belongs to someone else. The elements of adverse possession are actual occupation and "open and notorious" possession that deprives the rightful owner of the use of the property by means that are exclusive, hostile and continuous. A prescriptive easement is a type of adverse possession that occurs with the continuous use of another person's real estate property without permission of the rightful owner. After a specified time that varies by jurisdiction, the former owner often forfeits property rights over the affected parcel of land.

Conservation easements involve the donation of the use of privately owned land to another entity, usually a governmental agency, in the interest of the public good. In many instances, land involved with conversion easements constitutes an important environmental habitat; in others the public good preserves open space or structures with architectural significance. Constructive easements only involve giving up some rights to the use of the property; owners retain other rights. For instance, if you normally herd cattle on a parcel of land, in most instances you may continue to do so after granting a conservation easement for that parcel of land, according to Flathead Land Trust.

With both affirmative and negative easements, the landowner must continue to pay property taxes for the land, in exchange for retaining ownership of the land. However, paying property taxes strengthens a claim of adverse possession, according to the Free Legal Dictionary. On the other hand, the federal government grants tax credits for conservation easements; states and other jurisdictions may also grant property-tax-related benefits, according to the Private Landowner Network website.