Most people who donate land or a conservation easement to a land trust are motivated by love for the land and their wish to see that land preserved for future generations.
Some donors, like Bill and Judy Stone of Burlington, also take advantage of tax benefits associated with land conservation gifts.
For many donors it is a combination of some sort of payment for development rights together with tax incentives.
Tax laws change frequently. This is a guide but anyone considering a donation of a conservation easement should work with a qualified attorney or tax planner familiar with up-to-date tax laws and conservation tax benefits.
Outright cash gifts are the simplest way to support a land trust and gain a tax deduction.
Other assets like securities, stocks and life insurance can also be donated. The IRS rules governing donations vary according to the type of gift. Taxpayers may deduct up to 50 percent of their adjusted gross income for cash donations.
The value of a gift of either land or a conservation easement, if the gift meets IRS qualifications, can be deducted from the donor's federal income taxes.
Under current tax laws, landowners who donate conservation easements or land to land trusts or government bodies may be able to deduct the fair market value of their donation up to 50 percent of their adjusted gross income in the year they make the gift.
The remaining value can be carried forward as deductions for 16 years.
When Burlington apple growers Bill and Judy Stone first looked into donating a conservation easement to a conservancy in order to protect their farm from future development the tax laws were not favorable.
Stone says deductions needed to be taken in just a few years and much of the benefit would be lost because the family's income was not high enough to use all the deductions available.
Then the law changed to extend the deductions to 16 years and they reconsidered the benefits.
In the case of farmers who want to protect their farms from development, they can have a qualified appraiser determine the appraised value of the farm if it is sold for development and the value if it was sold at current agricultural land prices. The difference is the "development rights" sold or donated.
A recently renewed law allows farmers to deduct up to 100 percent of the value of a donated conservation easement from their income taxes.
Farmers are defined as those who receive more than 50 percent of their income from "the trade or business of farming," and can be individual or corporation.
Land trusts are currently working with partners and supporters in Congress on a variety of proposals that would exclude land under easement, or agricultural lands in general, from the estate tax.
Achieving tax savings through a conservation gift is possible and incentives have helped thousands of landowners who were looking for ways to preserve their farmland.
It can take several months to put together a plan and certain rules apply.
The gifts of land or conservation easements must be to a qualified organization such as government body or land trust; be for conservation purposes; be permanent; be properly appraised; be reported using IRS Form 8283.
In Wisconsin, local tax assessors must consider the effects of a conservation easement when assessing property.
To learn more, contact an experienced land trust. They can illustrate successful examples of land donations and conservation easements, and outline the steps a landowner should take to examine the available options.
Land trusts cannot provide legal or financial advice and they cannot guarantee the success of a particular plan or give potential donors a "ball park" estimate of a tax break.
IRS rules for qualified conservation gifts are in the tax code in IRC Section 170(h) - that section of the code is linked on Land Trust Alliance's web page and posted several places on-line.
Look for information at www.lta.org/policy/tax-policy.