Easements leave land in private ownership and can
result in federal and state income tax reduction and reduced estate taxes
Conservation easements are
the most commonly used method of voluntary land protection. A conservation
easement is a legal agreement between a landowner and a conservation organization
or agency that permanently limits uses of the land in order to protect
its conservation values. It allows you to continue to own and use your
land and to sell it or pass it on to your heirs.
When you donate a conservation
easement, you permanently give up some of the rights associated with the
land. For example, you would limit the right to subdivide the land to build
additional residences or businesses while retaining the right to farm the
land. Future owners also will be bound by the easement’s terms and the
conservation organization will be responsible for making sure the easement’s
terms are followed.
are flexible land protection tools. An easement on a farm can allow continuing
changes to adapt to the latest farming needs including construction of
agriculture buildings. An easement can allow for secondary residences and
even some subdivision under the right circumstances. It may apply to a
portion of the land and it need not allow public access. In short, an easement
must protect the land’s conservation values, but it can also be fashioned
to meet the landowner’s financial and personal needs.
A conservation easement
donation that meets federal tax code requirements can qualify as a tax-deductible
charitable donation. This can result in substantial Federal and State Tax
savings. In Virginia, a relatively new law provides for a further tax deduction
such that for many Virginia resident landowners, there may be no State
income tax for several years.
Perhaps most important,
a conservation easement can be essential for passing land on to the next
generation. By limiting the land's development potential, the easement
lowers the assessed value of the land and thus lowers the estate tax if
the land is part of the taxable estate. Whether the easement is donated
during life or by will, it can make a critical difference in the heirs’
ability to keep the land intact. For additional informantion on easements,
please go to our Frequently Asked Questions page.
and Forestal Districts
Helps preserve farms & forests for a specified
Each county in Virginia
has the authority to establish Agricultural and Forestal Districts.
The Districts are set up in accordance with the Virginia Agriculture and
Forestal Districts Act, Title 15.2-4300 to 4314, which empowers local governments
to create such Districts "to conserve and protect agricultural and
forestal lands as valued natural and ecological resources which provide
essential open spaces for clean air sheds, watershed protection, wildlife
habitat, as well as for esthetic purposes". Currently Greene County
has A&F Districts with the period for renewal every 10 years.
The current period began in 2000.
Restricts regulations that could limit farming operations
Being in an A&F District
commits the landowner to not develop the property other than in support
of agricultural and forestal purposes during the term of the District.
They can continue with uses that are broad and inclusive of current and
future farm and family activities.
Being in the A&F
District ensures that for the term of the District, the owner will pay
the lowest "land use" taxes no matter what is done to change the tax structure.
Being in the District also constrains what the local and State governments
can do that would impair the continued use of the land for agricultural
and forestal purposes. Thus an A&F District is good for landowners
because it helps them preserve their farms and forests and gives some protection
they would otherwise not have.
Can result in a substantial income tax deduction
and can be structured in a way that allows you to continue to live on the
land or to receive a life income.
Donating land for conservation
purposes is truly one of the finest legacies a person can leave to future
generations. It may be the best conservation strategy for you if you do
not have heirs or do not wish to pass the land on to heirs; own highly
appreciated property; have substantial real estate holdings and wish to
reduce estate tax burdens; or would like to be relieved of the responsibility
of managing and caring for land.
An outright donation
of land to a willing conservation organization releases you from any responsibility
for the land and can provide substantial income tax and estate tax benefits
(while avoiding any capital gains taxes that would have resulted from selling
the property). Most importantly, if the land is donated because of its
conservation value, it will be protected. (Although our focus here is on
conservation land, commercial and residential properties can also be donated
to a conservation organization, with the understanding that they will be
sold to support the organizations conservation work).
Donating a remainder interest in land. An outright donation is not the
only way to give land.
You can continue to live
on the land by donating a remainder interest and retaining a reserved life
estate. In this arrangement, you donate the property during your lifetime,
but reserve the right for yourself or any other named person to continue
to live on and use the property (called a "reserved life estate"). You
have donated to the conservation organization a "remainder interest" in
the property. When you or those you’ve specified die or release their life
interests, the conservation organization will have full title and control
over the property.
By donating a remainder
interest, you can continue to enjoy your land and may be eligible for an
income tax deduction when the gift is made. The deduction is based on the
fair market value of the donated property less the expected value of the
reserved life estate.
Donating land by will.
If you want to own and control
your land during your lifetime, but assure its protection after your death,
you can donate it by will. You should make sure the chosen recipient is
willing and able to receive the gift.
Land donations that establish a life income.
If you have land you would
like to protect by donating it to a land trust, but need to receive
income during your lifetime, you might use a charitable gift annuity. In
a charitable gift annuity, you agree to transfer certain property to a
charity, and the charity agrees to make regular annuity payments to one
or two beneficiaries you specify for life.
Your gift of land usually
qualifies for a charitable income tax deduction at the time of the gift,
based on the value of the annuity payments.
for donating property and receiving regular income is a charitable remainder
trust. You place the land in a trust, first putting a conservation easement
on it if it is to be protected. Then the trustee sells the land and invests
the net proceeds from the sale. One or more beneficiaries you specify receive
payments each year for a fixed term or for life, then the trustee turns
the remaining funds in the trust over to the conservation organization.
The gift qualifies for
a charitable income tax deduction when the land is put in the trust, based
on the value of the land less the expected value of the payments.
Charitable gift annuities
and charitable remainder trusts are most useful for highly appreciated
land, the sale of which would incur high capital gains tax.
Bargain Sale of Land
Combines income-producing benefit of sale with tax-reducing
benefit of donation
If you need to realize
some immediate income from your land, yet would like the property to go
to a conservation organization for protection, a bargain sale might be
the answer. In a bargain sale, you sell the land for less than its fair
market value. This not only makes it more affordable to the conservation
organization, but offers benefits to you: it provides cash, avoids some
capital gains tax, and entitles you to a charitable income tax deduction
based on the difference between the land’s fair market value and its sale