“It was love at first sight,” Phoebe Driscoll says of the home and property where she and her late husband lived for nearly 50 years. When they donated the land to Natural Lands Trust, it became a stunning 45-acre addition to our Gwynedd Wildlife Preserve.
Donating your land to an organization like Natural Lands Trust is the most straightforward way to ensure that it is permanently protected and properly managed in perpetuity. When you make a donation, you transfer full title and ownership to the recipient. As with any donation, you will be eligible for a federal income tax deduction that can be of substantial financial benefit. And, although you are transferring title to a non-profit organization, you may still be able to live on the property.
Outright Donation
In the most basic form of donation, full fee interest in a property is transferred to a conservation organization or government agency. This qualifies the donor for a federal income tax charitable deduction for the fair market value of the property as determined by a qualified appraiser.
Donation with Life Estate
If you are interested in donating your land for conservation purposes but want to continue to live there, donation with a life estate can be a solution. Generally, the property owner reserves the right to continue to live on the donated property until some triggering event (usually when the property owner moves from the property or dies) conveys possession of the property to the recipient organization.
Bequest
You may also donate your property through your will or living trust. This allows you to maintain full control of the land during your lifetime. When land is donated through bequest, the donor’s estate receives an estate tax charitable deduction for the fair market value of the property, thus reducing estate taxes that are often substantial.
Asset Property
Perhaps you own a fairly small property that has been in the family for years and you can’t bear the idea of it being subdivided into smaller lots in the future. While your land may not be a high priority for protection by a land trust, you may still be able to leverage it for substantial conservation and tax benefit. In this case, the landowner donates the property to a conservation organization that, in turn, places a conservation easement on it restricting future development. The organization then sells the property and uses the proceeds to support other conservation projects. The landowner may be entitled to a federal income tax charitable deduction for the value of the property.
Supporting the Ongoing Cost of Land Management
Once you have donated your land for conservation purposes, the recipient organization must cover the cost of managing the land in perpetuity. Because these organizations are either non-profit or governmental, they will likely need a source of funding to support these costs. This is why it is essential to consider providing an endowment along with the gift of land.
The size of this endowment will depend on the size and features of the land. An endowment can be established using other assets, like securities, cash, or other real estate. Some landowners have used life insurance to fund an endowment. When there is no other source of endowment available, a recipient organization may create one by subdividing off a small piece of the protected land—an “endowment lot”—and use it as an asset property. Proceeds from the sale of the asset property are used to establish the endowment.
