how the land trust acquires open space

The Guilford Land Conservation Trust is an all-volunteer membership organization that helps landowners to protect land in many ways. It is funded solely by membership gifts, bequests, and pledges, and it is not part of local or state government. The land trust owns about 2500 acres in Guilford; that land will be permanently protected. It is the largest single-town land trust in the state, and recently celebrated its 40th anniversary.

Options for protecting land may range from an outright donation of land to a blend of conservation measures. Given the status of the Guilford Land Conservation Trust as a tax-exempt organization under ¤ 501(c)(3) of the Internal Revenue Code, many of these measures may provide the landowner with significant tax benefits. Of course, you should obtain tax advice from a qualified professional before considering your options, particularly if tax consequences are important to you.

1. Donation of Land to the Trust . The donor is entitled to a charitable contribution for income tax purposes equal to the fair market value of the gifted land as determined by an independent qualified appraiser retained by the landowner. Such a gift also reduces the value of the landowner's taxable estate by excluding it entirely from the estate's assets.

2. Reserved Life Estate. A gift of land through a reserved life estate enables a donor to retain sole possession and use of the gifted property for his or her lifetime. A charitable contribution for income tax purposes is allowed in accordance with Internal Revenue Service regulations. As with a donation of land, the gifted property is removed from the landowner's taxable estate.

3. Conservation Easement. Ownership of the land is not transferred to the land trust, but a conservation easement imposes permanent restrictions on the future use of the land. For example, an easement can require that property remain forever in its natural state or in agriculture. As ownership changes, the land remains subject to the restrictions of the easement. A charitable contribution is allowed equal to the difference between the fair market value of the land before and after the easement. An easement may also reduce the value of land within the landowner's estate as well as property taxes. More information on conservation easements is listed below.

4. Testamentary Gift. Gifts of land and conservation easements can be made to the land trust by Last Will and Testament. While testamentary gifts do not result in a charitable contribution for income tax purposes, they can dramatically reduce the estate tax liability faced by the next generation and also guarantee that the property is maintained as the donor requests. Codicils to a will can be an effective interim measure to protect land while planning is underway, but you should check with your lawyer. To ensure that the land trust understands your wishes for the land and that it is appropriate for preservation or some other use, we ask that you contact us during the planning process.

5. Bargain Sale. The land trust may buy land at less than fair market value. The difference between the bargain sale price and the fair market value is a charitable contribution. Thus, this is part gift and part sale. The seller realizes a combination of a tax savings and a return on a portion of the equity in the land.

6. Fair Market Purchase. Sometimes the land trust buys land or conservation easements at fair market value. This depends on the property and its conservation value, and if funds are available. In most instances, such purchases are dependent upon the ability of the land trust to raise the necessary funds from the community at large or from grants, which are not always available. In other instances, the land trust may negotiate a purchase in conjunction with a governmental development rights or open space program.

7. Limited Development. The high value of real estate in Guilford has put some parcels beyond acquisition by the land trust. Also, town regulations may allow development of a larger piece of land on smaller lots than otherwise applicable, if part of the land is set aside as open space. As a result, we may help to prepare conservation plans for parcels that identify areas to be protected, as well as marginal land that can be developed or sold to pay for the acquisition and management of the preserve areas. Such "limited development" plans enable us to implement alternatives to outright development under existing subdivision regulations.

CONSERVATION EASEMENTS

With a conservation easement, a landowner voluntarily agrees to sell or donate certain rights associated with his or her property - most often the right to develop - and the land trust agrees to hold the right to enforce the landowner's promise not to exercise those rights. In essence, those particular rights (usually the right to develop) no longer exist.

The easement is either voluntarily donated or sold by the landowner, and constitutes a legally binding agreement that limits certain types of uses or prevents development from taking place on all or part of the land forever. The land, however, remains in private hands - title to the property is not transferred to the land trust.

Conservation easements protect land for future generations while allowing owners to retain most private property rights and to live on and use their land, at the same time potentially providing them with tax benefits. Conservation easements do not allow public access or use of the property, unless the landowner expressly agrees to do so.

An easement selectively targets only those rights necessary to protect specific conservation values, such as water quality or migration routes, and is individually tailored to meet a landowner's needs. Because the land remains in private ownership, with the remainder of the rights intact, a property subject to an easement continues to provide benefits to the landowner, such as farming and exclusive use.

The property subject to the conservation easement still belongs to the landowner. That means that the property may be passed along to heirs. But a conservation easement is legally binding on anyone who ever owns the property, whether the property is sold or passed on to heirs.

Because use is permanently restricted, land subject to a conservation easement may be worth less on the open market than comparable unrestricted and developable parcels. If so, conservation easements will enable the landowner to qualify for tax benefits in compliance with Internal Revenue Service rules. Specifically, if land is suitable for development but the landowner donates a conservation easement to the land trust, then generally the landowner is entitled to a federal income tax deduction in the amount of the decrease in value of the property (that is, the difference in the value of the property if it may be developed and the value of the property if it may not be developed).

Congress recently liberalized the deductions available for conservation easements for the 2006 and 2007 tax years. The new law:

• Raises the deduction landowners can take for donating a conservation easement from 30% of their income in any year to 50%;

• Allows qualifying farmers and ranchers to deduct up to 100% of their income; and

• Extends the carry-forward period for a donor to take tax deductions for a voluntary conservation agreement from 5 to 15 years (in other words, if the donor's income in any one year is not enough to use all of the deduction, the unused deduction can be "carried forward" to future years).

In addition, lands subject to conservation easements may be subject to lower property tax assessment because the land's highest and best use (development, if that is possible on the property) has been diminished permanently. Further, lands subject to conservation easements have lower value for purposes of estate taxes.

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