Eleven Point River Conservancy
Income and Other Taxes
Donations and Gifts
Gifts to the Eleven Point River Conservancy can help protect beautiful lands while enabling the givers to realize
tax benefits. A summary follows of tax saving gift arrangements and ideas to consider for financial and estate plans.
Outright cash gifts are the simplest way of gaining tax deductions while supporting the Eleven Point River Conservancy.
However, donations of other assets such as real estate, securities, or life insurance may be more appropriate.
Donated real estate such as homes, vacant lots, or commercial and industrial properties, may be sold-with development
restrictions, if appropriate, with the proceeds used to further the goals of the Eleven Point River Conservancy.
Gifts of appreciated real estate held long term may entitle a property owner to an income tax deduction for its full
fair market value, subject to certain limitations.
Real estate that meets EPRC's criteria would be protected in its natural state, according to terms and conditions
outlined in a conservation easement. Potential federal income tax benefits vary with the particulars of each donation.
Essential points to consider are the following:
- The easement must be granted to a qualified conservation organization, such as the Eleven Point River Conservancy,
or a public agency charged with overseeing land conservation or historic preservation programs.
- An easement must be granted exclusively for conservation purposes such as preservation of
natural habitats or resource lands, historic sites, unique scenic landscapes, wildlife corridors or connections to
other preserved parcels, areas of concern for public education or recreation, open spaces in the vicinity of intense
land development, or land for farming or ranching. In general, the maximum allowable deductions arise from
conservation easements donated over large tracts of open space in areas where development pressures are intense.
- Internal Revenue Code 170(h) defines "conservation purposes" to include the following:
- the preservation of land areas for outdoor recreation by, or the education of, the general public,
- the protection of a relatively natural habitat of fish, wildlife, or plants, or similar ecosystem,
- the preservation of open space including farmland for scenic enjoyment or pursuant to an adopted governmental
conservation policy; in either case, such open space preservation must yield a significant public benefit
- the preservation of historically important land areas or certified historic structues
The easement must be granted in perpetuity.
The amount a property owner can deduct for a donated easement generally equals the reduction
in the property's value due to the easement (the difference between the property's independently appraised value before
the easement is granted and after the easement's restrictions take effect).
The amount of a deduction that may be claimed by a donor in any taxable year generally will be limited to a percentage
of the donor's adjusted gross income for that year and may be carried for a number of years after the year of the
donation until the deduction is fully used. Note: A deduction claimed for a donation of a conservation easement
affects a donor's basis in the subject property.
The appraisal that determines the easement value must meet strict federal substantiation requirements
as specified in federal tax law regarding conservation easements.
State and federal inheritance taxes on unrestricted land are sometimes so high that heirs are forced to sell some or all of the land just to pay these
taxes. Because a conservation easement can reduce the market value of the property by reducing its development potential, inheritance taxes are also
If the property owner has restricted the property by a perpetual conservation easement before his or her death, the property must be valued in the
estate at its restricted value. To the extent that the restricted value is lower than the unrestricted value, the value of the estate will be less,
and the estate will thus be subject to a lower estate tax, and another beautiful piece of land will have been saved.
A 1997 tax act put in place an added incentive for easement donations in certain areas, such as those affected by urban sprawl or those surrounding
national parks. A tax advisor can help determine whether an easement on a certain parcel of land would qualify for this additional estate tax benefit.
A conservation easement can be devised (donated) as part of a will and then deducted from the taxable estate. The negotiation of the easement should
occur prior to inclusion in the will. In addition, a 1998 tax act allows heirs to donate a conservation easement on inherited lands.
When a gift of land is made to a family member or other person, it is subject to federal gift taxes if its value exceeds the maximum tax-free amount.
A reduction in the value of the property through a conservation easement may allow a landowner to give more land in any one year without creating
a gift tax obligation, or it may help reduce the amount of gift tax owed.
Tax laws change - A lawyer or tax planner will have access to further details. Professional financial counsel
is essential because each donor's tax situation is unique.