Information for Landowners

Information on Conservation Agreements

What is a conservation agreement?

A landowner and qualified conservation organization or government body may enter into a conservation agreement that permanently limits a property's uses for the purpose of preserving conservation values such as recreation, scenic beauty, wildlife habitat or water quality. The Coastal Land Trust is qualified to accept and hold conservation agreements. Generally, a landowner promises to keep his or her property in a natural or undeveloped condition and the Coastal Land Trust enforces that promise by regularly monitoring the property. Conservation agreements need not cover all of a tract of property, preclude all development, or necessarily allow public access. Land with a conservation agreement may still be sold or passed on by will, but all future owners are bound by the terms of the conservation agreement. The Coastal Land Trust has the right and duty to enforce all restrictions of a conservation agreement and may resort to legal action if necessary.

What are the benefits of a conservation agreement?

Conservation agreements are a flexible option for landowners interested in protecting their land from development because an agreement can cover all or part of a property and may be tailored to needs of the owner and Coastal Land Trust. Some limited development may be allowed on a conservation agreement. Further, depending on the particular attributes of each property, limited commercial activities are sometimes allowed, such as farming, grazing, thinning of trees and hunting. Landowners who donate conservation agreements may be rewarded in tax savings, charitable contribution deductions, income tax credits and lower property taxes.

What is a typical conservation agreement like?

Every conservation agreement is different depending on the unique qualities and location of a particular property. A typical conservation agreement would likely limit heavy commercial development, set a maximum number of buildings allowed to be constructed, allow low-intensity uses such as farming, hunting, and allow wildlife management. Generally, a landowner continues to manage conservation agreement property unless otherwise agreed. Public access is not a conservation agreement requirement, but landowners must grant access to Coastal Land Trust stewards to periodically monitor the property.

Are there expenses associated with conservation agreements?

The normal expenses to a grantor for a conservation agreement donation are the land survey, appraisal, accounting fees, legal fees for tax planning, recording fees and a stewardship endowment to assist the Coastal Land Trust with future monitoring expenses.

Please see the "Voluntary Conservation Agreements" booklet published by the Conservation Trust for North Carolina for more information; it is available at:
http://www.ctnc.org/site/DocServer/CTR-019_VolConsBook_FINAL_2010.pdf?docID=2301

For more information, email Cassie Gavin /info-resources or call (910) 790-4524 ext. 201.

Donating

There are a variety of options available to landowners interested in donating conservation lands. Full donation of is a simple way to proceed. Donated lands may be established as nature preserves, wildlife refuges, scientific reserves or parks.

Some landowners choose to donate a conservation agreement rather than a full donation. When a conservation agreement is made, the landowner retains ownership of property, but gives up some ownership rights, such as the ability to develop. Land with a conservation agreement may still be sold, or passed on by will.

Further, a landowner may choose to donate property by will. If interested in this option, a donor should ensure that the Coastal Land Trust is willing and able to accept the gift. This kind of donation will reduce estate taxes, but will not reduce income or property taxes.

Donations of property and donations of conservation agreements that meet federal and state tax code requirements may qualify as tax-deductible charitable donations. To make a conservation agreement donation all owners of a property must agree to donate.

Bargain Sales

Another option open to landowners is a bargain sale of property. A bargain sale is when property is sold to a public agency or conservation organization for less than full market value. Benefits to landowners who choose to do bargain sales include receiving immediate cash and the benefit of a charitable income tax deduction based on the difference between a property's fair market value and the bargain sale price.

Federal Tax Benefits for Individuals - Conservation Agreements

The IRS allows federal tax benefits to landowners who donate conservation agreements on properties with exceptional land resources or historic landmarks of great public value. In addition, the conservation agreement must be perpetual, made to a qualified donee, such as the Coastal Land Trust, and meet one or more of the following four conservation purposes:

• Preservation of land for public outdoor recreation or education;
• Protection of relatively natural habitats for fish, wildlife, plants;
• Preservation of open space, including farm and forest land, according to clearly delineated government conservation policy;
• Preservation of historically important lands and buildings, including those listed on the National Register of Historic Places.

A donor of a qualified conservation agreement may claim its value, determined by a qualified appraisal, as a deduction for income, gift and estate tax purposes. Landowners should consult with their tax advisors for guidance on this issue.

North Carolina Tax Credits

North Carolina state tax credits are available to donors of conservation agreements if the donated property fulfills an identified conservation purpose and is donated to a qualified organization. The Coastal Land Trust is qualified to receive and administer land for conservation purposes. The conservation purposes identified by the State of North Carolina differ from the federal conservation purposes listed above and include: public beach access and use, public access to public waters, public access to trails, fish and wildlife conservation, historic value and other similar conservation purposes. North Carolina state tax credits are calculated based on the reduced market value of a property with an agreement. Income tax credit is a dollar-for-dollar deduction in taxes owed, equal to 25% of the fair market value of donated property. North Carolina requires an appraisal to show the value of an agreement. North Carolina state tax credit can be used in the year of a gift, and any unused portion may be carried over for the next five (5) years. Tax credit in any one year cannot exceed the amount of income tax imposed by the state, reduced by the sum of all other credits. Any remainder of gift value may be claimed as a regular charitable deduction.

Please go to the NC Conservation Tax Credit Program page for more detailed information provided by the NC Department of Environment and Natural Resources.

Tax Advantages for Corporations, Partnerships, Trusts and Limited Liability Companies

Corporations are subject to special tax laws that differ from individuals. Corporate counsel should always be consulted to evaluate any proposed donations. Further, if land is held in partnership, trust, Limited Liability Company or other entity, an attorney and accountant should be consulted to evaluate the potential tax benefits of a donation. Real estate companies, in particular, may be subject to additional issues related to a conservation gift, and should consult their advisors very early in the planning process for any development project.

For more information, email Cassie Gavin /info-resources or call (910) 790-4524 ext. 201.

Funding Options

The Coastal Land Trust utilizes many sources of private and public funding for purchasing land as well as funding conservation agreements. Applying for public monies is a complex and competitive process. The Coastal Land Trust, however, has an excellent record of receiving targeted grants.

Landowners interested in conservation can apply directly to state and federal sources for funds to help implement conservation measures on their lands. Local Soil & Water Conservation District office can provide more information. Please see The North Carolina Association of Soil & Water Conservation Districts website for more information and a list of Soil and Water Conservation Districts with phone numbers at http://www.ncaswcd.org/.

For more information, email Cassie Gavin /info-resources or call (910) 790-4524 ext. 201