Tax Talk
Land protection may provide certain income tax or property tax benefits, and can be an important part of estate planning. The tax implications of a conservation gift will depend on the timing and the value of the gift, the donor’s financial circumstances, tax laws and rates at the time of the transaction, and other factors. The Monadnock Conservancy can supply general information about the tax implications of land protection, but a landowner considering conservation options should consult with his or her own tax advisors.
Federal Income Taxes: In relinquishing the right to develop a property through a conservation easement, the landowner may reduce the financial value of a property and may be able to claim that difference in value as a charitable gift. Under conservation standards established by the federal government, the charitable deduction is based upon the value of the rights a landowner gives away, whether it is an easement or full ownership.
Estate Taxes: A conservation easement may reduce the value of a landowner’s estate, thereby reducing the estate taxes levied on his or her heirs. This may enable heirs to keep the property, rather than being forced to sell it to pay estate taxes.
Property Taxes: In some cases, placing a conservation easement on land may reduce local property taxes.
Costs
There are some costs associated with donating an easement or land to the Monadnock Conservancy. A landowner is generally expected to be responsible for certain aspects of the easement conveyance process, including survey costs, legal and recording fees, due diligence fees such as a hazardous waste review and title review, and the cost of staff time for the transaction and baseline work. The Conservancy staff can provide updated information on approximate costs. There are limited funds that may be available to help landowners with these expenses in case of need.
When the Conservancy accepts an easement, it takes on the permanent responsibility of upholding the terms of the easement. The Conservancy, therefore, asks that easement donors make a one-time tax-deductible contribution to its Easement Stewardship Endowment, which enables the organization to watch over the land in perpetuity. Monies must be committed to this fund prior to the execution of the easement. Guidelines for contributions to the Stewardship Fund are available at the office.
