If you are ready to begin making plans for your land, please contact the Riverside Land Conservancy. The Conservancy will provide expert advice that can make financial sense for you and your family. Some approaches to consider include: partial or full land donation programs (described below), conservation easements, and land sale methods.
If you would like someone from RLC to contact you, please fill out the Real Estate Donation Form and mail it to the RLC office.
Donating land for conservation purposes is one of the finest legacies a person can leave. Land donation may be the best strategy for those who:
Land donation may provide substantial income tax deductions and estate tax benefits. Although RLC focuses on preserving open space, commercial or residential property might also be donated, with the understanding that the property would be sold to support future conservation efforts.
Partial sale/partial donation is a very attractive alternative. Under such circumstances, the Conservancy works to arrange the sale of the property with the landowner, along with finding the funding to accomplish the transaction.
By donating through a remainder interest, a landowner may continue to live on land and retain a reserved life estate. In this arrangement, one donates land but continues to live on and use the property. The land trust gains full title and control over the property only after the donor is deceased. By donating a remainder interest, the landowner may be eligible for an income tax deduction when the gift is made. The deduction is based on the fair market value of the donated property less the expected value of the reserved life estate.
Donation by will is the method to use for those who would like to own and control land, but assure its protection after death. It’s important to make sure that the chosen recipient is willing and able to receive the gift.
A charitable gift annuity is a tool for those who need a lifelong income. With a charitable gift annuity, one agrees to transfer property to a charity, and the charity agrees to make regular annuity payments to specified beneficiaries.
A gift of land usually qualifies for a charitable income tax deduction at the time of the gift, based on the value of the land less the expected value of the annuity payments.
Another option for donating property and receiving regular income is a charitable remainder unitrust. One places land in a trust, first putting a conservation easement on it, if it is to be protected. Then the trustee sells the land and invests the net proceeds from the sale. One or more specified beneficiaries receives payments each year for a fixed term or for life, then the trustee turns the remaining funds in the trust over to the land trust. The gift qualifies for a charitable income tax deduction when the land is put in the trust, based on the value of the land, less the expected value of the payments.
Charitable gift annuities and charitable remainder unitrusts are most useful for highly appreciated land, the sale of which would incur high capital gains tax.
A conservation easement (or conservation restriction) is a legal agreement between a landowner and a land trust or government agency that permanently limits uses of the land in order to protect its conservation value. It allows landowners to continue to own and use their land and to sell it or pass it on to heirs.
When a conservation easement is donated to RLC, the landowner gives up some of the rights associated with the land. For example, a landowner might give up the right to build additional structures, but retain the right to grow crops. Future owners would be bound by the terms specified by the easement. RLC would be responsible for making sure that the terms of the easement were followed.
Conservation easements offer great flexibility. An easement may apply to a portion of the property and need not require public access. For example: an easement on property which supports rare wildlife habitat might prohibit development. An easement on agricultural property might permit continued farming and the construction of additional agricultural structures.
Landowners usually donate easements, but sometimes conservation easements are sold. Easements may qualify as tax-deductible charitable donations if they benefit the public by permanently protecting important resources and if they meet other federal tax code requirements. The amount of the donation is the difference between the land's value with the easement and the land’s value without the easement.
Placing an easement on property may also result in property tax savings.
A conservation easement may be essential for passing land on to heirs when it helps lower estate taxes. By removing the potential for development, the easement lowers the land’s market value, resulting in lower estate tax. Whether the easement is donated during life or by will, it may make a difference to the heirs' ability to keep the land intact.
If a landowner needs to realize some immediate income from selling land, yet would like the property to be preserved, a purchase might be arranged. However, land conservancies, which are nonprofit organizations, usually have limited funds for land purchases.
A fair market sale is often not as advantageous for a landowner as one might expect, due to capital gains taxes and selling costs, including real estate commissions. With a bargain sale, land is sold for less than its fair market value. A bargain sale combines the income-producing benefits of a sale with the tax-reducing benefit of a donation. A bargain sale often makes it feasible and affordable for the Riverside Land Conservancy to acquire property.
For further reading, refer to Conservation Options: A Landowner's Guide available from the Riverside Land Conservancy, or Preserving Family Lands and The Conservation Easement Handbook, available for purchase from the Land Trust Alliance.