This past summer, congress passed a new incentive for landowners who permanently protect their land. The value of your conservation donation can now be deducted up to 50% of a person's Adjusted Gross Income, increased from 30%. The deduction can also be carried forward on the donor's federal taxes for 15 years, increased from 6 years. Qualified farmers can deduct up to 100% of their income. However, these tax incentives are only good for donations made through 2007! These new changes apply to Conservation Restrictions and Remainder Interests, two tools which allow landowners to protect their land.
A Conservation Restriction is a legally binding covenant between a landowner and an organization such as a land trust or state agency. The CR allows landowners to retain ownership of the property, including the ability to pass the property on to heirs or to sell the property, but protects the natural and scenic features of the property by restricting selected uses, such as development. Conservation restrictions are permanent and remain in effect when the land is sold or inherited. A conservation restriction can cover all or part of a property.
A Remainder Interest transfers the land to a land trust, but reserves the right of the donor or heirs to use the land until their deaths. Then when the life tenants die, or release their life interests, the land trust or conservation organization assumes full title to the property.
Land is often a family's most valuable asset. Planning the future of your land gives you the satisfaction of knowing that your land and estate will be handled in the way you want. Planning the future of your land also makes transferring land easier by reducing the value of the land, thereby reducing the estate tax due.
Every landowner's goals and financial situation are unique. An excellent first step is to contact your local land trust to have a no obligation conversation about the options for planning the future of your family's land. It is also recommended that you get professional advice from a lawyer who works with conservation related estate planning tools and consult an appraiser familiar with valuing land for conservation purposes.