Farm and forest land preservation with conservation easements
Download
1 / 28

Farm and Forest Land Preservation with Conservation Easements - PowerPoint PPT Presentation


  • 309 Views
  • Uploaded on

Farm and Forest Land Preservation with Conservation Easements. Topics to be Covered. What is a conservation easement? What is a land trust and how do they relate to conservation easements? What sorts of restrictions do conservation easements place on landowners?

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Farm and Forest Land Preservation with Conservation Easements' - yoninah


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript

Topics to be covered l.jpg
Topics to be Covered Easements

What is a conservation easement?

What is a land trust and how do they relate to conservation easements?

What sorts of restrictions do conservation easements place on landowners?

How can conservation easements benefit landowners?

What is involved in creating a conservation easement?


Fine print l.jpg
Fine Print Easements

This presentation provides basic information on conservation easements.

Anyone involved in granting a conservation easement should contact qualified professionals for legal and financial planning assistance.


Property ownership l.jpg
Property Ownership Easements

Property ownership is a collection of individual rights

This collection of rights is often compared to a “bundle of sticks” because individual rights can be removed from the collection just as a stick can be removed from the bundle


Examples of property rights transfers l.jpg
Examples of Property Rights Transfers Easements

Lease – right to exclusive possession

Easement – right to use

Zoning

Deed with restrictions - retention of rights

Conservation easement


What is a conservation easement l.jpg
What is a conservation easement? Easements

Legal, voluntary agreement between a landowner and a land trust or government agency that restricts the development or use of property

In effect, conservation easements remove the right to develop the property from the landowner’s “bundle of sticks”

Conservation easements “run with the land” - they bind both current and future landowners


Conservation easements l.jpg
Conservation Easements Easements

Land trusts and government agencies can leverage resources by only acquiring the rights relevant to their goals.

Landowners retain all other rights.


What is a land trust l.jpg
What is a land trust? Easements

A non-profit organization that holds land and/or the rights to enforce the provisions of conservation easements “in trust” for the public good


How can conservation easements benefit landowners l.jpg
How can conservation easements benefit landowners? Easements

Preserve desired land uses into the future

Allow continued use of the land

Potential source of income

Possible tax benefits

Property Taxes

Income Taxes

Estate Taxes


Conservation easements as a possible source of income l.jpg
Conservation Easements Easementsas a Possible Source of Income

Some land trusts and government agencies can pay full value for the rights extinguished in a conservation easement

More often, they are only able to acquire these rights through either a “bargain sale” (below fair market value) or a donation


Property tax benefits l.jpg
Property Tax Benefits Easements

Conservation easements often decrease the value of property because they foreclose the possibility of future development

Difference can be dramatic

Potential savings are often reduced if the land is already being assessed for its currentuse and not fair market value


Income tax benefits l.jpg
Income Tax Benefits Easements

Donation or bargain sale may qualify as a charitable donation for federal and state income taxes

To qualify for federal income tax benefits, a conservation easement must meet certain requirements specified in Section 170 of the Internal Revenue Code

http://www.irs.gov/taxpros/article/0,,id=98137,00.html


Estate tax benefits l.jpg
Estate Tax Benefits Easements

Conservation easements reduce value of an estate just as they reduce the value of the property for property tax purposes

If the easement reduces the value of the property by at least 30% it may also qualify for additional estate tax benefits under Section 1031 of the Internal Revenue Code


Steps involved in granting a conservation easement l.jpg
Steps Involved in Granting a Conservation Easement Easements

Locate a receiving entity

Compile a baseline inventory

Negotiate and draft the terms of the conservation easement

Execute and record the documents

Get the property appraised


Steps involved in granting a conservation easement15 l.jpg
Steps Involved in Granting a Conservation Easement Easements

Locate a receiving entity

Must be a “qualified organization” for income and estate tax purposes

Compatible and stable partner

Must be willing to purchase or accept a donation of the conservation easement

Typical factors considered include current use, size and location of the property and costs of acquiring, monitoring and enforcing the conservation easement


Steps involved in granting a conservation easement16 l.jpg
Steps Involved in Granting a Conservation Easement Easements

Compile a baseline inventory

Establishes a reference point for determining compliance with the terms of the conservation easement

Includes

Title search

Survey of the property (may not be needed)

Description of current uses of the property

Description of resources that the easement is designed to protect


Steps involved in granting a conservation easement17 l.jpg
Steps Involved in Granting a Conservation Easement Easements

Negotiate terms

For working lands, landowner should seek not only to retain rights for current uses, but also the flexibility to allow future changes in operations

Receiving entity will seek meaningful and enforceable restrictions relevant to its mission


Other landowner considerations l.jpg
Other Landowner Considerations Easements

Future borrowing power

Impacts of increasing property values

Conditions under which the terms of the conservation easement can be modified or invalidated


Steps involved in granting a conservation easement19 l.jpg
Steps Involved in Granting a Conservation Easement Easements

Execute and record the documents

Conservation easements must be executed by all current owners of the property

The holders of any mortgage or deed of trust must consent in writing to the easement and the consent must also be recorded

Its also prudent to inform others with interests in the property

Conservation easements are publicly recorded with other land records


Steps involved in granting a conservation easement20 l.jpg
Steps Involved in Granting a Conservation Easement Easements

Obtain an appraisal of the property

Needed to qualify for certain tax benefits


Conclusion l.jpg
Conclusion Easements

Conservation easements are an attractive way to preserve current land uses

Conservation easements may have other significant benefits for landowners

Conservation easements are legally binding agreements that should not be entered into without great care and thought

Especially true for working lands


Comments or questions l.jpg

Comments or Questions? Easements

For additional information see Farm and Forest Land Preservation with Conservation Easements available online at http://srwqis.tamu.edu/program-ruralurbaninterface.aspx

This presentation is produced by the Southern Regional Water Program with support by the Cooperative State Research, Education, and Extension Service, U.S. Department of Agriculture, National Water Program, under Agreement No. 2004-51130-03114. Any opinions, findings, conclusions, or recommendations expressed in this presentation are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture.


Federal income tax l.jpg
Federal Income Tax Easements

Sale For Less Than Fair Market Value of the Easement to a ‘Qualified Organization’ is Deductible


Slide24 l.jpg

Deduction = Fair Market Value Minus Sales Price. Easements

Deduction Limited to 30% of Person’s Adjusted Gross Income (10% For Corporations).

Any Excess Can Be Used For Up To Five More Years.


Federal income tax25 l.jpg
FEDERAL INCOME TAX Easements

DEDUCTION INCREASED FOR EASEMENTS MADE FROM

1/1/06 THRU 12/31/07


Federal income tax26 l.jpg
FEDERAL INCOME TAX Easements

DEDUCTION LIMIT RAISED FROM 30% TO 50% ADJUSTED GROSS INCOME

LIMIT RAISED TO 100% AGI FOR “QUALIFIED” LANDOWNERS

CARRY-FORWARD PERIOD EXTENDED FROM 5 TO 15 YEARS


Qualified l.jpg
“QUALIFIED” Easements

MORE THAN 50% GROSS INCOME FROM FARMING.

‘AGRICULTURAL’ LAND

REMAINS AVAILABLE FOR AG USE UNDER THE EASEMENT

CAN BE AN INDIVIDUAL OR CORPORATION


For more information l.jpg
For More Information Easements

IRS Website

http://www.irs.gov/publications/index.html

This presentation is produced by the Southern Regional Water Program with support by the Cooperative State Research, Education, and Extension Service, U.S. Department of Agriculture, National Water Program, under Agreement No. 2004-51130-03114. Any opinions, findings, conclusions, or recommendations expressed in this presentation are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture.


ad