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 Donating land to a nonprofit
conservation organization such as a
land trust or to a public
conservation/agency, is the most
straightforward method of permanent
land protection, and it results in
the greatest direct tax benefit for
the donor. There are many ways to
donate land.
Conveying land by gift to a land
trust or other conservation agency
transfers ownership and management
responsibilities from you the
recipient, ends the burden of your
property taxes, provides you with
maximum income tax and estate tax
benefits, and avoids the capital
gains tax which would be incurred if
you sold the land.
 A land donation can be structured to
allow you to continue to live on the
land by donating a remainder
interest and retaining a reserved
life estate. You may also choose to
donate land by will, continuing to
own and control your land during
your lifetime, but assuring its
protection after your death. Most
important, the donated land will be
protected in perpetuity.
Outright Gift
of Land
An outright gift of land may be the
best conservation strategy for you
if:
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You own
highly appreciated property |
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You
have substantial real estate
holdings and wish to reduce
estate tax burdens |
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You do
not wish to pass the land on
to heirs |
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You own
property you no longer use |
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You own
property you cannot now
build on – it has become a
financial albatross |
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You
would like to be relieved of
the responsibility of
managing and caring for the
land |
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You
wish to make a lasting gift
to the environment, to your
community and to future
generations |
Advantages of
Outright Gifts of Land
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Simplicity and permanence
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If you
or family members own or
retain adjacent or nearby
property, you may benefit
from its proximity to
conservation land. |
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Generally, the fair market
value of the donated
property is tax-deductible
as a charitable
contribution. |
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You
avoid capital gains taxes
upon the land. |
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You
eliminate property taxes on
the donated land (after any
past and current taxes are
paid) |
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You
reduce the size of your
estate, and thereby reduce
the amount of state and
federal estate taxes.
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Donating Land
By Will
The donation of land to a land trust
or conservation organization by will
(only known as bequests,
testamentary gifts, or devises) has
become an increasingly popular
technique for conserving land in
Massachusetts. Recipient
organization should be consulted
before including the gift in your
will.
Advantages of Donating Land by Will:
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Ensures
conservation of your
treasured property, and
allows you to enjoy the
benefits of full ownership
during your lifetime |
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Reversibility: you can
re-write your will at any
time to remove the donation
if your financial situation
or intentions change. |
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Relative simplicity of
bequest preparation which
avoids detailed negotiations
required to determine best
income tax deduction on
gifts made during your
lifetime |
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Removes
property from your estate,
which can significantly
reduce estate taxes for your
heirs |
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Donating A
Remainder Interest with A Reserved
Life Estate
You can donate property during your
lifetime, and reserve the right for
yourself, and other persons you
specifically designate, to continue
using the property during your
lifetimes. When you and those you
have specified either die or release
their interests, the land
trust/agency assumes full title and
control over the property.
How it works:
The value of the gift for tax
purposes is the value the remainder
interest, i.e., the length of time
reserved for personal use. This is
determined by subtracting the value
of the reserved life estate
(determined from actuarial tables)
from the appraised fair Markey value
of the property. The longer the
period of reserved use (i.e., the
younger the donor or specified
holders of the reserved life
estate), the lower the value of the
remainder interest, and so the value
of the gift for tax purposes will be
commensurately lower. The values are
determined from IRS actuarial tables
based on average life expectancies.
Advantages of a Remainder Interest
with a Reserved Life Estate
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The
income tax advantages of
this strategy are les than
from an outright donation,
but they are greater than
from a gift by bequest. |
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As a
holder of a reserved life
estate, you would continue
to be responsible for
property taxes until the
recipient obtains full title
to the property |
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Donating
Non-Conservation Real Estate to
Generate Conservation Funds
You can generate badly needed funds
for conservation purposes by
donating real estate of any kind to
support the work of your local land
trust or other conservation agency.
Property that does not have special
natural features or that is not
suited for permanent management by a
conservation organization may be a
candidate for such a donation. Two
easy ways you can generate badly
needed funds for open space purchase
and protection and reap major tax
benefits for yourself are donations
of Trade Land and donation of land
through a Charitable Remainder
Trust.
1. Trade Land Donation
A donated commercial property, or a
single family home, a condominium or
other type of real estate can
provide tremendous rewards for the
non-profit organization, and can
create substantial tax benefits for
you. The recipient organization can
resell the property, subject to
appropriate restrictions to protect
any conservation values, and use the
proceeds to benefit its conservation
programs, including the purchase of
critical lands elsewhere. This
method maintains your real estate in
its present form and use, keeps it
in private ownership, and on the tax
rolls, and allows the land trust to
use proceeds from the sale for its
conservation work.
2. Donating Land to Benefit
Conservation While Establishing a
Life Income
By establishing a Charitable
Remainder Trust, you can protect
land, provide significant,
immediate, and long-term tax
benefits, and assist in your family
estate planning. In the case of real
estate, this is an excellent way to
increase income from a low-yielding
asset.
How it Works:
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You,
the donor, with the advice
of an attorney experienced
in planned giving
techniques, establish a
Charitable Remainder Trust.
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You,
the donor, donate a
Conservation Restriction on
your property to a land
trust or other conservation
agency. You then give the
restricted property to the
Charitable Remainder Trust,
which allows you to claim a
charitable tax deduction |
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The
Trust sells the property
(you avoid capital gains
taxes), and invests the
proceeds to provide income
to you or your designated
beneficiaries for a fixed
term or beneficiary’s
lifetimes |
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After
that point, the trustee
turns over any remaining
funds in the trust to the
designated land trust or
conservation organization |
Advantages of
a Charitable Remainder Trust
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