"When we see land
as
a
community to
which
we belong,
we may begin
to
use it with love
and
respect."
Aldo Leopold
(1886 - 1948)
American Forester
Mississippi Valley Conservancy
Conservation Programs
Potential Tax Benefits from
Land or Easement Donations
Land Donations:
Landowners who choose to donate land to the Mississippi Valley Conservancy do so for many reasons: to ensure their land is conserved for future generations or to provide a lasting memorial. Gifts of land can result in a charitable tax deduction as well as avoidance of capital gains taxes for the landowner. The IRS requires an independent qualified appraisal for this deduction.
The Conservancy will conduct a site inspection of the land and determine if it is environmentally significant. If the land does not meet our land protection guidelines, it will be considered as a trade land and sold to provide funds for conservation of land elsewhere.
Conservation Easement Donations:
Donation of a conservation easement can result in significant income, estate and property tax benefits. As long as it meets federal tax code requirements, the donation will be treated as a charitable deduction for tax purposes.
How is the easement value determined?
When a conservation easement limits or restricts the right to develop, the value of the land is affected. That value is determined by a qualified appraiser.
1. The land is appraised in light of its full development potential.
2. The land is appraised again, taking into account the easement restrictions that limit some or all of the property's development rights.
3. The difference between these two figures is the value of the easement.
In instances where the easement is donated and it qualifies under IRS regulations, this amount is also the value of the charitable contribution that can be taken as an income tax deduction. Please note: An appraisal is not required unless a landowner wants to take advantage of the charitable deduction.
How do you calculate tax benefits?
Federal Income Tax Benefits
Under the IRS code, the donation of a qualified conservation's easement may be treated as a charitable contribution.
- A conservation agreement donor can deduct up to 50% of their adjusted gross income in any year;
- Qualifying farmers and ranchers can deduct up to 100% of their adjusted gross income; and
- Donors can carry over deductions for their contribution for as many as 15 years.
Property Tax Benefits
- A conservation easement may reduce or stabilize a landowner's property taxes. This depends on factors such as current zoning and land use and current assessed value.
- Under Wisconsin law, tax assessors must take a conservation easement into consideration in establishing the market value of the land subject to the easement. The exact terms of each individual easement also have a bearing on its effect on property taxes.
Estate Tax Benefits
- Donations of easements, whether during the landowners life or by bequest, can reduce the value of the land upon which estate taxes are calculated. This can greatly benefit the landowner wishing to transfer the land to relatives.
- The estate tax benefits of a conservation easement can often mean the difference between heirs having to sell the property to pay estate taxes or being able to keep the property in the family.
NOTE: We provide this FACTSHEET as a source of information for the landowner and recommend that he or she seek independent counsel from legal and financial experts familiar with charitable giving of land and property easements.
You can reach MVC by mail at P.O. Box 2611, La Crosse, WI 54602-2611, by phone at
608-784-3606, fax at 608-784-0257, or by e-mail at:
info@mississippivalleyconservancy.org
Send email to webmaster with questions or comments.