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All landowners are strongly encouraged to seek tax advice from an independent accountant and legal advice from an independent, experienced estate planning attorney when considering a conservation agreement or donating all or a portion of their land. All decisions regarding donating or placing a conservation agreement on land for the protection of property for the benefit of future generations should be made only after consultation with experienced, qualified attorneys and accountants.

• Donating
• Bargain Sales
• Federal Tax Benefits for Individuals - Conservation Agreements
• North Carolina Tax Credits
• Tax Advantages for Corporations, Partnerships, Trusts and Limited Liability Companies

There are a variety of options available to landowners interested in donating conservation lands. Full donation of property presents the greatest tax savings for donors and is the simplest way to proceed. Full donation is best for donors who do not wish to pass on a particular property to heirs, no longer use the property and wish to reduce their tax burden, or be relieved of management responsibilities. 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. Conservation agreements need not cover all of a tract of property, prohibit all development, or allow public access to qualify for tax benefits. Land with a conservation agreement may still be sold, or passed on by will. Every conservation agreement has unique reserved rights and restrictions depending upon the attributes of the property. The Coastal Land Trust negotiates such details on a case by case basis with landowners.

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 can qualify as tax-deductible charitable donations. The value of a conservation agreement donation equals the difference between the property's value with an agreement and its value without an agreement. Conservation agreements may also result in property tax savings. To make a conservation agreement donation all owners of a property must agree to donate.

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.

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:

1. Preservation of land for public outdoor recreation or education;
2. Protection of relatively natural habitats for fish, wildlife, plants;
3. Preservation of open space, including farm and forest land, according to clearly delineated government conservation policy;
4. 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 as a deduction for income, gift and estate tax purposes. The exact extent of a property's decrease in value with a conservation agreement must be determined by the donor's appraiser. An appraiser applies a before and after test to value an agreement, calculating the difference between the value of a property before an agreement, and after. The value of land with a conservation agreement equals the loss in value of a property resulting from agreement restrictions. The landowner is responsible for getting an appraisal on a conservation agreement property no earlier than sixty (60) days before making a contribution and no later than the date on which a deduction is claimed on his or her tax return. The IRS requires a special 8283 form to be submitted with tax returns filed by individuals claiming a charitable donation valued at $500 or more, and a qualified appraisal must be attached if one claims a deduction of $500,000 or more.

A donor may claim an income tax deduction for the full value of the agreement. The IRS caps the amount of deduction that can be claimed in the year a donation is made at 30% of adjusted gross income for individuals. Landowners may then carry over any unused portion of the donation for the next five (5) years and deduct up to the same percentage each year. For donations made in the year 2007 (only) special legislation allows a deduction of up to 50% of adjusted gross income and a carryover period of fifteen (15) years. The tax benefits described above apply to "capital gain property"; special rules apply to land that does not qualify as capital gain property. Landowners should consult with their tax advisors for guidance on this issue.

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.

To qualify for North Carolina state tax credit the taxpayer must file a certification by the North Carolina Department of Environment and Natural Resources (DENR) with their tax return for the year in which the credit is claimed stating that the donated property serves a public benefit. To get this certification, DENR staff review the donation, may visit the property and make a recommendation to the North Carolina Department of Revenue. North Carolina liberally construes benefits of conservation gifts; however state tax credit is not allowed for gifts to the federal government, land dedicated to conservation due to local government regulations, or gifts made to increase building density levels.

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

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.