Landowners: Stewards of the Future
Why should I consider conserving my lands?
Having “conservation motivation” can be the most lasting contribution you can make to yourself and to future generations. By voluntarily working with a land trust, you can control how much preservation or how little development you would like to have on your property – in perpetuity.
There can also be the reward of immediate tax benefits, depending upon each landowner’s individual circumstances. A donation of development rights in land to a land trust is like donating a Van Gogh to the Art Museum. It can lower the value of the land while allowing you and your heirs to continue to own and enjoy it, potentially resulting in (1) income tax deductions, (2) reduction in estate taxes, (3) lowered property taxes, and, in Colorado, (4) tax credits that can allow for a cash refund.
Landowners should consult a tax attorney for more information on the potential tax benefits. CCLC does not give legal or tax advice, but we will be happy to recommend experienced, reasonable lawyers who will represent your interests in any transaction.
How does a land trust work to help landowners?
Land trusts can provide a variety of “tools” to help landowners protect their land:
- Conservation easements. The most frequently used tool is a “conservation easement” (CE) which is a voluntary written agreement between the landowner and the land trust (or government agency) that permanently limits some future land uses to protect the conservation values of the property. It’s not an easement like a driveway right-of-way (in fact it may not allow public access at all). It is a conveyance of specific development rights to the land trust, where they can never be used. For example, a landowner might grant a conservation easement that preserves all of a 100-acre natural area except for a 2-acre part for a future residence. Think of a CE as preparing a “Do’s and Don’t’s” list for your property. Landowners may donate or sell a CE to a land trust, but donation is the norm and achieves the highest tax benefits (see above). With a CE, the landowner continues to own and use the property and can sell it or will it to heirs. Future owners of the land are bound by the recorded CE as well. CEs have become the most commonly used land conservation tool, with thousands of them protecting millions of acres of land. CCLC has received donations of CEs from individual landowners, trusts, communities, and Jefferson County.
- Outright land donations. A donation of the full fee ownership of land to a land trust is also possible. This can be a very effective strategy for a landowner who (1) no longer uses or wants the land, (2) does not plan to pass land on to heirs, (3) owns property that has appreciated greatly in value, (4) wishes to reduce estate taxes, and/or (5) is no longer willing or able to manage the land. Again, there can be substantial tax benefits to such a donation, while avoiding capital gains taxes from its sale. While most land donations are of natural areas to be held in perpetuity, owners can also donate other properties with the understanding that they will be sold (with or without restrictions) to support the land trust’s work. CCLC has received donations of fee ownership of hundreds of natural acres from individuals and a foundation.
- Other land donations. Deferred land donations can also be made.
- Wills: One can pass ownership to a land trust through one’s will (gift by devise), continuing to own and manage it during his or her life.
- Remainder interest: A landowner can donate land to a land trust, reserving the right for him or herself or any other named party to continue to live on and use the land until death (or voluntary release of the remainder interest. This can also be called a reserved life estate. CCLC is open to considering these types of deferred land donations, but landowners should of courts discuss such plans in advance with the land trust, to be sure the gift can be accepted.
- Land sales. A landowner may want to protect land, but feel the need for financial compensation. Most land trusts do not have assets on hand to purchase expensive properties. However, in the case of particularly important lands and high landowner financial need, there are some limited possibilities for working together on fundraising, government acquisition, finding a “conservation angel,” or other measures. Properties can be sold for fair market value (no tax benefits) or a “bargain sale” below fair market value (potential tax benefits). CCLC has participated in one such transaction, in cooperation with Jefferson County Open Space.