The Land Alliance’s biannual newsletter serves as our progress report to the community. We aim to highlight the important conservation work taking place and educate our members and friends on the issues that affect the natural beauty and environmental health of our community. As we take on the 30×30 challenge, we find this a good opportunity to share the primary tools utilized in land conservation.
A conservation easement is a voluntary agreement between a landowner and a land conservation organization, such as the North Shore Land Alliance, that is permanently binding on the land, no matter who owns it. The landowner retains all rights to own, sell and use the land according to the provisions of the easement. All conservation easements must provide at least one public benefit (and multiple are better) such as water quality, farmland preservation, scenic views, wildlife habitat, outdoor recreation and historic preservation. If the easement is restrictive enough so that the property is diminished in value, this reduction in value may qualify for treatment as a tax-deductible federal charitable contribution.
The Land Alliance does not provide tax or legal advice, but below is an example of a theoretical qualifying Federal tax deduction scenario.
The Federal Tax Deduction
Donors have up to 16 years to take their income tax deduction (including the year of the gift) and can deduct up to 50% of their adjusted gross income in each of those years up to the value of the donation.
Example: Susan Doe donates a conservation easement valued at $400K. Her annual income is $80K. She can deduct 50% of her annual income or $40K the first year for donating the easement. She can make that deduction for the following 15 years or until the value of the easement is reached. In the first year, she deducts $40K from her income and pays taxes on $40K. She does that for the next 10 years until she will have deducted the full $400K.
Please Note: There is a New York State tax-credit possibility, but it is currently complicated by the SALT cap deduction.
Gifts of Land
Donating land for conservation purposes is one of the finest legacies a person can leave for future generations. A donation of land to a qualified conservation organization releases the donor from the responsibility of managing the land and has the potential to provide substantial income tax deductions and estate tax benefits, while also avoiding any capital gain taxes that can result from a sale of the property.
Bargain sales of land combine the income-producing benefit of a sale with the charitable incentives of a donation. This blending of conservation tools enables organizations like the North Shore Land Alliance to do more conservation work and find creative ways to achieve landowners’ goals and financial needs. A bargain sale is the sale of land (fee title) or a conservation easement (partial interest) to a qualified organization at less than fair market value. This not only makes it more affordable for the conservation buyer but offers several benefits to a landowner.
Under unique circumstances, the Land Alliance might purchase a property outright. For example, the Humes Preserve was created through an outright purchase. These situations are rare and require tremendous donor support as the Land Alliance does not, at this time, have a land acquisition war chest.
We’re happy to answer any questions regarding the conservation tools available to landowners. Additionally, we can guide you through the process of executing your conservation objective.
Example: A property or conservation easement is valued at $150,000 and the owners sell it to a qualified conservation organization for $100,000. The $50,000 difference is counted as a charitable contribution.