Protect Your Land
Do you own land that you would like
to see remain free from development or to remain as a ranch or farm --
for your lifetime and for future generations?
Land trusts are experts at helping landowners find ways to protect their
land. Here are a few of the options open to you - all of them voluntary.
Conservation Easement. A legal agreement between a landowner
and a land trust. It permanently limits certain uses of the land to protect
its conservation values, while the landowner continues to own and use
the land. Donating the easement can result in reduced
income tax and estate tax.
Land Donation. Donating conservation land to a land trust is a wonderful way to share its beauty with future generations. The donation can even be set up in a way that allows you to continue to live on the land or to receive a life income.
Bargain Sale of Land. Selling
land to the land trust at less than its fair market value can make it
affordable for the land trust and provide tax benefits for the landowner.
Conservation Options for Landowners
A conservation easement (or conservation restriction) is a legal agreement between a landowner and a land trust that permanently limits uses of the land in order to protect its conservation values. It allows you to continue to own and use your land and to sell it or pass it on to heirs.
When you donate a conservation easement to a land trust, you give up some of the rights associated with the land. For example, you might give up the right to build additional structures, while retaining the right to grow crops. Future owners also will be bound by the easement's terms. The land trust is responsible for making sure the easement's terms are followed.
Conservation easements offer great flexibility. An easement on property containing rare wildlife habitat might prohibit any development, for example, while one on a farm might allow continued farming and the building of additional agricultural structures. An easement may apply to just a portion of the property, and need not require public access.
A landowner sometimes sells a conservation easement, but usually easements are donated. If the donation benefits the public by permanently protecting important conservation resources and meets other federal tax code requirements--it can qualify as a tax-deductible charitable donation. The amount of the donation is the difference between the land's value with the easement and its value without the easement.
Placing an easement on your property may also result in property tax savings. Perhaps most important, a conservation easement can be essential for passing land on to the next generation. By removing the land's development potential, the easement lowers its market value, which in turn lowers estate tax. Whether the easement is donated during life or by will, it can make a critical difference in the heirs' ability to keep the land intact.
Land Donation
Donating land for conservation purposes is one of the finest legacies a person can leave to future generations. It may be the best conservation strategy for you if you do not wish to pass the land on to heirs; own property you no longer use; own highly appreciated property; have substantial real estate holdings and wish to reduce estate tax burdens; or would like to be relieved of the responsibility of managing and caring for land.
Donating land releases you from the responsibility of managing the land and can provide substantial income tax deductions and estate tax benefits (while avoiding any capital gains taxes that would have resulted from selling the property). Most important, if the land is donated because of its conservation values, those values will be protected.
Donating a Remainder Interest in Land
An outright donation is not the only
way to give land. You can continue to live on the land by donating a remainder
interest and retaining a reserved life estate. In this arrangement, you
donate the property during your lifetime, but continue to live on and
use the property. When you die (or sooner if you choose), the land trust
gains full title and control over the property.
By donating a remainder interest, you can continue to enjoy your land
and may be eligible for an income tax deduction when the gift is made.
The deduction is based on the fair market value of the donated property
less the expected value of the reserved life estate.
Donating Land by Will
If you want to own and control your land during your lifetime, but assure its protection after your death, you can donate it by will. You should make sure the chosen recipient is willing and able to receive the gift.
Bargain Sale of Land
If you need to realize some immediate
income from selling your land, yet would like the property to go to a
land trust, a bargain sale might be the answer. In a bargain sale, you
sell the land to a land trust for less than its fair market value. This
not only makes it more affordable for the land trust, but offers several
benefits to you: it provides cash, avoids some capital gains tax, and
entitles you to a charitable income tax deduction based on the difference
between the land's fair market value and its sale price.
Your Next Steps
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Contact The Elk River Land Trust. We can help you arrive at a conservation plan that makes the most sense for you, and can put you in touch with attorneys, appraisers, accountants, and land planners familiar with conservation techniques.
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Talk with your family and consult your own legal and financial advisor regarding these important decisions.
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Read further. Three Rivers Land Conservancy offers a Landowner's Guide to Donating a Conservation Easement. The Land Trust Alliance offers several publications including Conservation Options: A Landowner's Guide, Preserving Family lands, and The Conservation Easement Handbook.
