There are different ways of realizing your conservation vision for your land and each has associated financial incentives and tax benefits; donating land is a lasting way to protect the natural features of your property and preserve the place you love for future generations to enjoy. There are several options for landowners who are considering donating property to LPBLT – we will work with each property owner to determine the most effective conservation plan and provide the best financial arrangement for the situation.
Any transfer of property requires legal and financial counsel. Landowners considering a donation to LPBLT should contact their lawyer and accountant for independent advice.
Options for protecting your land
If you are a landowner and would like to consider preserving and protecting all or some of your property to protect its natural features for future generations, there are many options to consider.
A conservation easement is a legal agreement between a landowner and a qualified organization, such as the Land Trust, that holds and monitors the agreement. An easement is a covenant registered on the property title and is binding for present and future landowners. An easement helps protect conservation values that a landowner and the holder of the agreement have mutually agreed should be protected. Each easement is tailored to fit the needs of the property and the landowner’s directions for its use.
Although the legal document that sets the terms of the easement is carefully crafted to meet the needs of both the landowner and the Land Trust, it can be quite flexible and can be used for a variety of purposes. Easements allow landowners to permanently protect natural areas such as wetlands, riparian areas, forest, or prairies. They can be used to preserve open space including farmland, scenic vistas, and recreational corridors. They may also allow landowners to utilize limited development of a portion of land while preserving the natural or cultural resources on the same tract.
Donation of an easement may result in tax benefits to the landowner; it can relieve the landowner of certain land taxes and income taxes, depending on their particular circumstances.
Donations of property
A. Bequest: The donation of a property to a qualified recipient, such as the Land Trust, at time of death, as provided for in a will, results in the unrestricted use of land by the owner until death, as well as a possible reduction of estate taxes. The disadvantages to the owner are the continued full property tax liability and the loss of income tax benefits for the donation.
B. Outright Donation: All rights to the land are transferred to a qualified recipient, such as the Land Trust, resulting in an income tax deduction for the full, appraised value of the land, and reduced estate taxes. In a less than full value donation, only selected property rights are donated, which may result in tax reductions.
C. Leaseback: Property is donated to a qualified organization, such as the Land Trust, but with the condition that there is a lease granted to the previous owner for the use of the property or part of the property. Such a condition placed on the gift may preclude any tax deduction for the donation for the part leased back.
D. Reserved Life Estate: Property is donated or sold, in whole or in part, to a qualified recipient, such as the Land Trust, with a provision that reserves the right of the owner (and/or specified persons) to use the land, or a portion of it, until death. The owner may claim an income tax deduction for the value of the donation, estate taxes may be reduced, and property taxes are levied only on that portion retained for personal use.
E. Ecological Gifts: Donation of certain lands, which are recognized as significant under the Ecological Gifts Program of the Government of Canada, may result in greater tax benefits, depending on personal financial circumstances.
Sales to Long Point Basin Land Trust
A. A sale at MARKET VALUE realizes full price for the owner but he remains liable for income and capital gains taxes. Non-profit organizations, such as the Land Trust, can rarely purchase property at full value for conservation purposes.
B. Selling land at a BARGAIN SALE price to the Land Trust yields an income tax deduction equal to the difference between the sale price and the full fair market value of the property, and also lowers capital gains taxes.
C. An OPTION is a contract between a potential buyer of a property, like the Land Trust, and a seller, which reserves the right of purchase to the buyer for an agreed upon price to be paid in a specified period of time. The buyer secures an option in order to gain time to raise funds for the purchase. The option cost is forfeited if no purchase ensues.
D. For protection purposes, a RIGHT OF FIRST REFUSAL is a legal agreement granting a potential buyer, such as the Land Trust, the right (for a limited time) to match any bonafide offer once a property is placed on the real estate market.
Donating a cherished piece of property to Long Point Basin Land Trust, or donating funds to support a property purchase, is a serious and honourable act of generosity. And the best way of maintaining a strong core to the Conservancy is to create a financial endowment – not to cover all future costs, but rather to guarantee a solid foundation to steward our properties no matter what happens.
For more information on donating land, please contact Kristyn Richardson at 519-586-8309 or firstname.lastname@example.org