Although landowners are drawn to work with Tar River Land Conservancy because of a love for their land and a desire to protect it, many are glad to find out that there can be financial benefits that result. Income tax benefits may be available for the donation of a tract of land or a conservation easement that meet certain criteria. These tax incentives are available not only to individual landowners, but also corporate landowners, partnerships, and limited liability companies. Although Tar River Land Conservancy cannot make any assurances that a particular land or easement donation will result in federal deductions, we work with each landowner and his or her tax and legal advisor to ensure that a land or easement donation is consistent with federal and state requirements.
In certain circumstances, TRLC is able to purchase land or conservation easements from willing landowners. Most purchases completed by TRLC are “bargain sales”, where the landowner allows TRLC to purchase the property for less than the full market value. Landowners who agree to sell a conservation easement or their land to Tar River Land Conservancy will often be asked to sign an option agreement. This agreement between TRLC and the landowner enables TRLC to raise funds for the project and establishes a timeframe for the transaction to be completed.
Federal Tax Deductions
The donor of a tract of land or conservation easement to Tar River Land Conservancy may claim a federal income tax deduction for the fair market value of the land or conservation easement as determined by a qualified appraiser. The Internal Revenue Service (IRS) limits the deduction to 50% of an individual donor’s Adjusted Gross Income in the year that the donation is made. The value of the donated land or easement not used in the year of donation can be carried forth for up to an additional five years, with annual deductions limited to 50% of the donor’s Adjusted Gross Income for the year.
The landowner must hire a qualified real estate appraiser to determine the value of the land or conservation easement being donated to TRLC. TRLC cannot determine the monetary value of a gift for purposes of a federal tax deduction.
Every donation of a conservation easement to Tar River Land Conservancy must meet the requirements of Section 170(h) of the IRS tax code. In particular, the conservation easement must serve one or more of the following conservation purposes:
• protection of relatively natural habitat of fish, wildlife, or plants
• preservation of open space including farm and forestland
• preservation of land for public outdoor recreation or education
• preservation of historically important land or buildings
• protection of scenic views