Tax benefits, including the lowering of income, property and estate taxes, can come from donating your land, donating a conservation easement, or selling your property as a “bargain sale” to the land trust at below market price. The amount and type of tax benefit depends on a variety of factors, including the legal tool you’ve used to protect your land, the value of the donation, your income level and the total amount of your estate. The land trust recommends that you consult your financial advisor and/or attorney for professional tax advice.
Potential Tax Benefits for Donated Conservation Easements
If a conservation easement 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. Because the conservation easement restricts the development potential of the property, the general value of the charitable gift is the difference in the fair market value of the land before and after the conservation easement. Easement values can vary greatly, however, and the highest easement values may result from very restrictive conservation easements on tracts of developable open space under intense development pressure. In some jurisdictions, placing an easement on your property may also result in property tax savings.
Perhaps the most important benefit of a conservation easement is that it can be essential for passing undeveloped land on to the next generation. By removing the land’s development potential, the easement typically lowers the property’s market value, which in turn lowers potential estate taxes. Whether the easement is donated during life or by will, it can make a critical difference in your heirs’ ability to keep the land intact.
Again, you should consult with your financial advisor and/or attorney to fully understand the potential tax benefits associated with the conservation tool you are considering.
More information can be found on the Land Trust Alliance website at www.landtrustalliance.org.