Conservation Easements

  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.

Conservation easements 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.
 
 

  Agriculture and Forestal Districts

  Helps preserve farms & forests for a specified time
  Restricts regulations that could limit farming operations

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.

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. 
 

 Land Donation

  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.

Another option  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 price.