Donations

Donating land or interests in land to a qualified non-profit organization, usually a land trust, is the simplest way to protect it. Donating the entire ìfee simpleî interest in your land, or a "conservation easement" (if you still want to own the land), can reduce both your state and federal income taxes, estate taxes, and property taxes.

Outright donation. This gives you the maximum tax advantages, because you can claim an income tax deduction based on the fair market value of the land (like any other charitable donation). You owe no capital gains tax if the property gained value while you owned it. The property value is also removed from estate tax consideration, and you pay no further property taxes.

Donating an easement. This deed, filed with the local registrar of deeds, lets you limit future use of your land. You convey certain rights to a land trust, but you still own the land, and you may still use, sell, lease, and regulate public access to it subject to the terms of the easement. Easements are usually permanent, and bind all present and future owners of the land, specifying what can be done to the surface of the land and its natural resources. Easements can allow farming, logging, and other uses of natural resources, or they can keep the land in an undisturbed natural condition.

A conservation easement's value as a charitable contribution is the difference between the value of the land without any restrictions and the value with the easement in place. The amount will depend on the conditions of the easement, but may be a substantial percentage of the land's value. An easement may also reduce the value of the property subject to estate taxes, and may result in a reduction of property taxes if local taxing authorities permit it. Several states also offer significant tax relief for conservation easements.

Reserved life estate. Donating the land, but keeping and using it during your lifetime (or that of other members of your family) is called a ìreserved life estate donation.î Such a donation will make you eligible for an income tax deduction for the present value of the future gift (the IRS has tables to compute this amount). The shorter the life estate is estimated to be, the greater the deduction.

Bequest. Donating land in your will enables you to retain all rights of ownership during your lifetime, but reduces the taxable value of your estate. You do not, however, benefit from income tax savings.

Asset Lands. Donating land distant from the A.T. that you do not necessarily want to be conserved allows ATC to resell the land and use the proceeds to further land conservation efforts along the Trail. When you do this, you receive the same tax treatment that would result from a donation of land along the A.T. itselfóthe same favorable tax results as donation of any other appreciated assets such as stocks, bonds, or tangible assets.

Sales

Even if you can't afford to donate the land or an easement on it, you may be able to sell it in a way that will help protect it, and may have tax advantages. Land trusts in general obviously can't afford to purchase all the lands they are trying to protect at fair market value. But under the right circumstances, such as those in the following examples, they may consider buying your land.

Bargain sale. You may agree to sell the property for less than fair market value, and deduct the difference between the fair market value and the sales price from your income taxes. For example, if you sell land valued at $50,000 for $25,000, the $25,000 difference can be deductible. A bargain sale might also reduce or eliminate your capital gains tax liability, meaning more cash in your pocket.

Landowner financing. You may be able to sell the land by taking back a mortgage on the property, often below current market interest rates. This reduces the buyer's purchase cost and helps the buyer to pay for the land with funds raised in the future rather than those now on hand.

Options. If a land trust cannot purchase your land immediately, you can sell or grant them an option. This guarantees the land trust the chance to buy your land in the future and establishes a price, while also giving them time to raise the funds required to complete the deal.