Love your land? We’re here to help you take care of it. CLC can provide you with a number of resources.
We’ve added a number of helpful articles and websites to help you! There are also several local organizations that are a wealth of expertise about how to best care for your property. If you’d like specific advice about contractors, please contact Heidi Bock at email@example.com or 518.392.5252, ext. 207.
Conservation easements are one tool landowners can use to protect their land for the future.
NOTE: A recent rulemaking by the Internal Revenue Service has created some uncertainty about the impact of the New York State Conservation Tax Credit, described in the tax benefits section below, on the availability or the amount of the charitable deduction for a qualified conservation contribution.
Donating Conservation Easements
Note: This information is intended as general information, not specific legal or financial advice.
Conservation easements are legal agreements that enable landowners to permanently protect their land while continuing to own and enjoy it. In a conservation easement transaction, landowners work collaboratively with a qualified nonprofit land trust such as the Columbia Land Conservancy (CLC) to determine which activities will be permitted on the property in the future, and which will not. Often, uses such as farming, appropriate forestry, and the right to build a home or two are permitted, while other development of the property is restricted. Although state statutes and federal regulations provide a guiding framework, the exact details of each conservation easement can be tailored somewhat to meet the unique needs of each property and landowner.
Landowners who are concerned with protecting the integrity of the natural resource and agricultural values of their property from future development often find a conservation easement to be a useful tool. Additionally, landowners who are concerned with issues such as a proactive response to climate change and mitigation of negative impacts to our regional ecosystems may find that a conservation easement helps them to achieve their goals for their property.
Conservation easements almost always permanently extinguish some of the development rights associated with a given property. As such, they affect the property’s value. The value of the conservation easement is generally defined as the difference between what the property is worth unrestricted and its value after the conservation easement is in place. As a general rule, the more restrictive a conservation easement is (i.e. the more value that is given up), the higher the value of the easement, particularly when it comes to restricting further development.
Donating a conservation easement to an organization such as the Columbia Land Conservancy generally qualifies as a tax deductible charitable gift. Such gifts can result in significant income, property, estate, and capital gains tax benefits, though there are also some up-front costs.
Give us a call! CLC’s trained staff would be happy to walk you through the various conservation options that might be suitable for you and your property, and to answer all your questions. Please call us at 518.392.5252. We look forward to hearing from you!
Purchase of Development Rights programs financially compensate landowners.
In this scenario, CLC works with the landowner to establish a conservation easement that will permanently protect the agricultural and natural resources of the land. As with donated conservation easements, the landowner still owns the property and can use it for farming and other purposes specified in the easement.To learn more about the purchase of development rights, you can click here and download this brochure.
New York State purchase of development rights (PDR) is also a powerful way to preserve farmland.
You can read more about that program here.
Besides relying on state or federal funding to purchase conservation easements on valuable farmland, private organizations and landowners have the potential to form long-lasting partnerships to permanently protect farmland
One of the ways in which a PDR can be funded is through the Agricultural Land Easement Program (ALE).
Donating land, or partial interests in land (such as a conservation easement), to an organization such as CLC can result in significant income, property, estate, and capital gains tax benefits, depending on your unique situation.
CLC provides the following as an informational resource to assist you in beginning a conversation with your own financial and tax advisors. The following should not be construed as legal or tax advice.
There can be many benefits to conveying land outright (i.e., the land and all the structures and rights associated with it, also known as “the fee,” “fee simple estate” or “fee title”). Donating land to an organization such as CLC typically qualifies as a charitable gift for federal and state income tax purposes. Typically, the value of the gift, as determined by a qualified appraisal in accordance with IRS regulations, can be deducted from the donor’s Adjusted Gross Income (AGI) – up to 30% of AGI in the year of the gift, and in each of the following five years, until the value of the gift is used up. Once you no longer own the land, you are no longer responsible for management and upkeep, or for paying the property taxes. If the land is donated, there is no capital gain to be taxed, and the value of the land is removed from your taxable estate, reducing your estate tax exposure. Most importantly, whether you donate your land for conservation purposes or as a tradeland, you can rest assured that your gift will contribute to conservation in Columbia County!
There are substantial tax incentives for donating conservation easements.
Federal tax law provides enhanced incentives for the donation of conservation easements that meet the “qualified conservation contribution” requirements of Internal Revenue Code Section 170(h) and Treas. Reg. § 1.170A-14. Individuals (and corporations that are taxed like individuals) can typically deduct up to 50% of their Adjusted Gross Income (AGI) in the year the gift and in each of the following 15 years, until the value of the charitable contribution is used up. Qualifying farmers can deduct up to 100% of AGI over the same time period. More information on the enhanced federal income tax incentives for the donation of conservation easements is available here. Many donors also see a reduction in state income tax liability as a result of the federal incentives.
NOTE: A recent rulemaking by the Internal Revenue Service has created some uncertainty about the impact of the New York State Conservation Tax Credit on the availability or the amount of the charitable deduction for a qualified conservation contribution.
The New York State Conservation Tax Credit provides New York State landowners whose land is restricted by a conservation easement that was established as a result of a donation (or partial donation) with an additional benefit: reduced property taxes. The benefit is available to the current owner of the protected land, regardless of whether or not it was the current owner who donated the conservation easement. The annual credit reduces property tax liability by 25% of the property taxes attributable to the land (not structures), up to $5,000 per year. Landowners must pay their property taxes in full, and the credit is provided subsequently by the state, regardless of whether landowners pay income taxes in NY. More information about the NY State Conservation Tax Credit is available here.
Landowners with or without conservation easements on their property may also wish to enroll in one of two state programs that provide a property tax reduction for eligible properties: the NY Forest Tax Program (480-A) and the NY Agricultural Assessment Program.
Placing a conservation easement on a piece of land during one’s lifetime can significantly reduce the value of that property, thereby reducing the value of the landowner’s estate. Most families find it preferable to take the time to have discussions about the future of their land, and make decisions, before a crisis hits.
If you choose to convey a conservation easement in your will, it is still advantageous to talk with your chosen land trust early on, to be sure they are prepared to accept your gift, and to agree upon the terms of the conservation easement in advance. Gifts of conservation easement by will that qualify under Section 2055(f) of the Internal Revenue Code (IRC) may not be subject to estate tax.
In certain circumstances, and in accordance with IRC Section 2031(c)(9), heirs may even grant a conservation easement after the death of the landowner (but before filing estate tax returns) and still take advantage of the estate tax benefits. It is important to note that this option, while useful, requires the family to make significant, permanent decisions, under time pressure, shortly after the death of a loved one.
Section 2031(c) of the Internal Revenue Code may also allow beneficiaries to exclude an additional 40% of the land’s restricted value from the value of the estate, subject to certain conditions. Individuals interested in potentially utilizing IRC Section 2031(c) should work with their tax advisers or estate planners to explore this option in more detail.
When a landowner sells their property, or a conservation easement, to a charitable organization at a price that is below appraised value, the transaction is referred to as a “Bargain Sale.” Bargain Sales help non-profit conservation organizations like CLC to reduce costs, while offering several benefits to the landowner: they provide the seller with some cash from the sale; they provide a potential income tax deduction for the donated value; and they reduce potential capital gains tax exposure.
Although conveying land and conservation easements are the most common ways for landowners to protect their land, other mechanisms are sometimes useful. If your unique situation is such that another tool might be best for you, such as a life estate or remainder interest, CLC staff can provide you and your tax advisors with some helpful resources on those topics as well. More information about Planned Giving is available on CLC’s website.