Conservation easement donations nationwide are up almost 150% since 2000. The new tax law that grants a Federal Tax incentive for land donations runs out at the end of this year so folks are scrambling to get their farm, ranch and larger properties set up into a conservation easement. The article below outlines the current benefits of donating your land to conservation and what it takes to get it done.
Here are some local resources in Crested Butte and Gunnison to help a land owner pursue a conservation easement:
Preserving the Land
Housing developments, subdivisions and strip malls are the antithesis of a setting for a vacation retreat. And to prevent this sort of growth, many second homeowners are taking an active role in ensuring that their refuge in the country stays sprawl free.
Donations of conservation easements — essentially, promises to limit development on the “donated” land — are up 148 percent since 2000, according to the Land Trust Alliance, a national organization that represents some 1,700 local and state land trusts.
A federal tax incentive passed last year that expires at the end of 2007 is spurring this wave of donations (although there is a bill in Congress that would extend the deductions permanently). “I get calls from new people every week,” said Stephen Small, a Boston-based lawyer specializing in land conservation law. Second homeowners who want to donate an easement this year should “get started now,” he said.
Mr. Small, who has handled some 500 separate conservation easements, said his clients are both second homeowners and multigenerational families with old farms. “My clients are thinking about this because they love their land and they don’t want to see it developed, paved over, or turned into a shopping mall,” he said. “But most of them are also capitalists, and they know if they do this, there are tax benefits.”
These are designed to compensate owners for the profits they would have realized had the property been developed. Before 2006, homeowners were restricted to a 30 percent deduction off of their adjusted gross income, but the new tax rule allows for a deduction of up to 50 percent. Also, the deduction can be applied every year for up to 15 years, to cover the full amount of the donation (the limit of the previous law was five years).
To qualify for the tax benefit, according to the I.R.S., a property must either be a habitat for certain types of wildlife, or lie adjacent to a public waterway or wetlands, or have a scenic or recreational quality for the community. “Scenic views from a public vantage point are very important and can help qualify an easement,” said Rebecca Thornton, the president of the Dutchess Land Conservancy, which has 25,000 acres under protection.
The first step to donating an easement is finding the appropriate nonprofit land trust to give it to. The Land Trust Institute maintains a list of local and state organizations. The property will need to be evaluated by the trust and get an appraisal. Owners will want to secure a lawyer, preferably one experienced in land conservation, as well as an accountant to work out the tax benefits, including any available state tax breaks. New York, for instance, has a new property tax credit of up to $5,000 a year for easements.
A lawyer can also help negotiate the terms of an easement, outlining how many times a parcel can be subdivided and even establishing a building footprint on the land. After all, having an easement next to the house does not have to mean never being able to add on a bedroom or build a new garage.
