Options for Keeping Some or All of Your Land in Its Natural State

Description

Tax Implications

Duration

Maintains Your Ownership

Current Use

A state program that reduces your property taxes in exchange for actively managing your forestland

Reduces property tax

Temporary (in effect until the landowner does something to disqualify the land)

Yes

Conservation Easement

A voluntary agreement that extinguishes certain uses--typically development, subdivision, and mining--while allowing others--such as forestry and farming

If donated, provides charitable deductions on income taxes and can lower the overall taxable value of your estate; if sold, you may incur capital gains taxes

Permanent

Yes

Bargain Sale

The sale of your land for a price lower than its fair market value

Income from the sale is taxable, but the difference between the appraised market value and the sale price is a charitable deduction if sold to a land trust or government agency

Permanent

No

Donation

Donating your land to a land trust, a conservation agency, or your community

Provides a charitable deduction for income taxes, and lowers the taxable value of your estate

Permanent

No

Bequest

Donating your land or a conservation easement through your will

Lowers the taxable value of your estate

Permanent

Yes

Life Estate

Transfers real estate while maintaining your right to use the property for the rest of your life

Provides a charitable deduction for income taxes, and lowers the taxable value of your estate

Permanent

Gives you the right to use the property until your death

Limited Development

Carving off a portion of the property for sale or development and conserving the rest

May create both capital gains for the sale and charitable deductions for the conservation portion

Permanent

No