DONATING LAND

Land donated to a land trust for conservation is truly one of the finest legacies a person can leave to future generations.  Communities across the country are enjoying nature preserves, recreation areas, and other open space today because of the foresight and generosity of landowners who have made gifts of their land.

Donating land is often especially attractive to landowners-

• whose land has significant conservation values and who do not have heirs, or whose heirs cannot or will not protect it;
• who own property that they no longer use;
• who own highly appreciated property the sale of which would result in large capital gains taxes;
• or who would like to be relieved of the responsibility of managing and caring for land that they otherwise treasure.

An outright donation of land has several benefits.  It is a relatively simple transaction.  It releases you from the responsibility of managing the land.  It provides substantial income tax deductions and estate tax benefits while avoiding any capital gains taxes that would result from selling the property.  Most important, if the land is donated because of its conservation value, it will be permanently protected.

    Donation & Charitable Deduction vs. Real Estate Sale & Capital Gains Tax

Donating land is a very generous act.  But, especially if the land has appreciated a great deal since you acquired it, it may not be as large a financial sacrifice as one would expect. 

If you donate your land to a charitable organization or government agency, you can claim an income tax deduction equal to the land's current fair market value. Generally, for a gift of long-term capital-gain property - which includes most gifts of appreciated land - the amount you can deduct in one year is 30% of your adjusted gross income. If the value of your gift exceeds 30%, you can carry forward the excess for up to 5 additional years, applied each year up to the 30% limit.

If you sell your land, you will incur capital gains tax on the appreciation. Your profit may be further reduced by a realtor's commission usually 6-10%, and expenses resulting from the time delay in finding a buyer. Donating the land will also remove its value from your estate, reducing future estate taxes. And, of course, you won't have to pay property taxes on it anymore.

For your convenience, we have outlined the procedure our organization uses when a donation of land is made available to us.

The first step the Land Trust takes when considering a donation of land is whether the property meets the objectives set forth in the Trust's Statement of Purposes.  Some of the guidelines and selection criteria used by the Trust are:

• its ecological value as a wildlife habitat.
• its ability to act as watershed protection for our drinking water supplies.
• the surrounding lands for future potential as a greenway.
• if it is under threat from development.

To determine the land's acceptability, a field inspection of the property is conducted by one of our naturalists.  A report is made to the Board of Directors and a decision is made to continue or to stop the process.

Next, a title search is conducted by our attorney and if acceptable, the preparation of the new deed.  All property taxes for the current year to date of transfer are to be paid by the landowner. The new deed is signed by the landowner and transferred to the Cumberland Land Trust in the presence of a public notary.  The deed is then recorded by our attorney.

Finally, a letter from the Trust is sent to the landowner substantiating the acknowledgement of the charitable gift for tax purposes.  In order to claim a deduction on federal income taxes, the IRS requires you to complete Form 8283 and requires an appraisal by a qualified appraiser within 6 months of the transfer.

Please complete and return this form if you decide you would like to pursue this conservation option further:

___________________________________________________________________________

THE CUMBERLAND LAND TRUST

Permission for a Field Inspection

Name of Landowner:____________________________

Date: _____________

Address:____________________________

Phone:____________

Location of Property for Consideration:
_________________________________________________

Assessors Plat # _____________    Lot # _________

Yes, I give my permission for a field assessment of the above property to the Cumberland Land Trust by a qualified naturalist for the purpose of determining its ecological value.    I understand there will be no cost or further obligation to the Cumberland Land Trust if I so choose.

Landowner's Signature: ___________________________

Upon acknowledgment of this letter, you will be contacted by a representative of the Trust and given a specific date and time of the inspection. 

In order to determine boundaries and markers you will need to supply the Land Trust with a copy of the deed description, and area plat map if possible. 

You may or may not wish to accompany the naturalist on the inspection to point out any distinguishing natural features.