Don't Let Another Tax Year Pass Without
Conserving Your Land
April 15 doesn't have to be painful again next
year. Instead, it can be a day you celebrate both
your tax savings and the satisfaction of permanently
conserving important open spaces.
The nation's 1,200-plus land trusts — nonprofit
organizations that are independent of government and
work hand-in-hand with landowners who choose to
conserve their lands — offer a variety of ways that
you can permanently protect your open space lands
and perhaps shave your tax bill:
Donate it to a nonprofit land trust;
Donate a conservation easement, which permanently
limits the type and scope of development; or
Sell the land to a land trust in a "bargain
sale" for below fair market price.
Income Taxes
Under the Internal Revenue Code, for most gifts of
appreciated land or conservation easements, a
taxpayer can deduct up to 30 percent of his adjusted
gross income in the year of the donation. If the
value of the gift exceeds that deduction, the
taxpayer can carry forward the balance for up to
five additional years.
For example, if Mrs. Landowner has an adjusted gross
income of $50,000 and makes a gift of a conservation
easement worth $80,000, her deduction in the first
year would be $15,000. The balance can then be
carried forward for each of five years until she has
deducted the full $80,000 value of her gift.
Estate Taxes
Because development pressures in most parts of the
country dramatically increased property values
during the past 20 years, many people are forced to
sell lands that have been in the family for
generations in order to pay estate taxes.
Consider the Triple Bar Ranch, a fictional working
ranch, but a true-to-life financial example. The
family patriarch bought the ranch in the 1960s, when
land was far less expensive. Today, it is worth
$1,250,000.
Mrs. Landowner is a widow, and the ranch comprises
nearly her whole estate. She and her husband
accumulated just $250,000 in other assets.
Therefore, her total estate is worth $1.5 million.
In nearly every state, the combined state and
federal estate taxes would be around $200,000 --
more than the surviving Landowner children could
afford to pay, even though they want to see the
ranch remain as open space.
The solution may be the voluntary donation of a
conservation easement, which legally limits the
amount and type of development that can take place
on land. An easement can be tailored to a
landowner's desires.
The easement may, for example, permit construction
of just two more large-lot homes but protect the
land from construction of a subdivision. As a
result, Mrs. Landowner may reduce the land's
market value to $750,000, down from its current
$1,250,000 value. Her estate, including $250,000 in
other assets, would then be worth $1 million, and no
estate taxes would be due.
The Growing Use of Conservation Easements
The nation's private, nonprofit land trusts have
been tremendously successful at land protection.
Grassroots land trusts had permanently protected
more than 6.2 million acres by the end of 2001. Of
that, approximately 2.6 million acres had been
protected by conservation easements, according to
the Land Trust Alliance (LTA). The amount of acreage
protected by conservation easements increased more
than fivefold since 1990.
Note: The Conservation Trust for Florida has further
information available on these and other options for
landowners interested in protecting their lands in
perpetuity and saving on their tax burden. Contact
CTF by calling (352) 466-4581 or by emailing
.
