To permanently protect your land from development you have several options. If you wish to retain ownership of
the land, you might consider a conservation easement (or "conservation restiction"), which
is a legal agreement between a landowner and a land trust that limits uses of the land to protect its conservation values.
When you donate a conservation easement, you give up some of the rights associated with owning the land. For example,
you might give up the right to build on the land while retaining the right to grow crops on it. It need not require
public access. Since your land's market value diminishes when conservation restrictions are applied, your property taxes
should decrease. Also, an easement donation that meets federal tax code requirements --- one which provides public benefit
by permanently protecting conservation resources --- can qualify as a tax-deductible charitable donation on your income tax.
A landowner may also donate land outright to a land trust, which can result in substantial
income tax savings and can be structured in a way that allows you to continue to live on the land or to receive a life income.
An owner who donates his land for conservation purposes no longer has responsibility for managing the land or for paying taxes
on it. If an owner wishes to continue to live on the land for the balance of his lifetime, he can donate a remainder interest in the property, meaning that the land will be transferred
to the land trust upon his death. Similarly, he can donate his land by will, so that
after his death the land trust will become the new owner.
If a landowner needs to receive some immediate income from his land yet wishes to have it preserved, a bargain
sale might be the answer. Under this arrangement, the land is sold to the land trust at less than fair market
value. The difference between the bargain sale price and its fair market value constitutes a charitable income tax deduction.
This arrangement also enables the landowner to avoid some capital gains tax.
Information provided by the Land Trust Alliance, 1319 F St. NW, Suite 501, Washington, DC 20004-1106.
