We live in an increasingly environmentally conscious world. Irrespective of your opinions about subjects like climate change, you’re likely high attuned to discussions over what we need to do, collectively, to preserve precious resources, clean up our messes and build towards a more sustainable way of life that also respects needs for economic growth.
To help preserve precious environmental resources, you might consider investigating a conservation easement. This arrangement formally grants power to a qualified private land conservation organization or federal institution to use your funds for the purpose of land conservation.
Some examples of appropriate purposes include:
- Maintaining a wildlife habitat and
- Fostering forest growth
The landowner (you) does not relinquish ownership rights to the property by accepting or creating a conservation easement. Rather, he or she just limits the use of the land strictly to achieve a desired conservation objective.
The tax benefits available for this kind of arrangement include the following:
- Income Tax Deduction: Like most charitable donations, you can claim a charitable tax deduction equal to the value of your donation. Donating a conservation easement effectively reduces the value of your property – you get tax benefits to offset the loss. Congress has also offered tax benefits for conservation easements.
- Estate Tax Deduction: In certain cases, members of the donor’s family may exclude 40% of the value of land protected by the conservation easement on the donor’s estate taxes. However, this exclusion is capped at a maximum of $500,000.
- Postmortem Conservation Easement: Heirs of a deceased landowner can choose to donate a postmortem conservation easement on the landowner’s behalf, subsequently reaping the estate tax benefits referenced above. However, the easement must be donated before someone files an estate tax return on the landowner’s behalf.
- Like-Kind Exchange: A landowner with a conservation easement may exchange the land in question for similar land in a like-kind exchange. A like-kind exchange is a relatively complicated process that applies only to specific circumstances—particularly in cases regarding agricultural land.
To learn more about the requirements and tax benefits of conservation easements, or about state-specific nuances surrounding this process, contact our experienced estate planning attorneys at (800) 827-7784 today.
