Conservation protects land important to our shared future. Whether it is wetlands, significant wildlife habitat, or recreational land, we all benefit from conservation because it contributes to the health of our ecosystem and the beauty of Southcentral Alaska.
When you give the gift of conservation—through a conservation easement donation or a gift of land to GLT—you join a growing community of charitable Alaskans shaping the future of our state.
By protecting land you care about, you can also be eligible for tax benefits, such as federal income tax and estate tax deductions.
What are the tax benefits of donating a conservation easement on my land?
When you donate a conservation easement on your land, you may be eligible for a charitable tax deduction for your federal income taxes.
A number of principles and I.R.S. criteria apply to the donation of conservation easements. In general, a donation can be eligible for an income tax or estate tax deduction if the conservation easement conserves land that:
- involves significant farmland, forestland, or open space that either provides scenic enjoyment for the public, furthers public conservation policies, or includes important historic lands or buildings; or
- includes relatively natural habitats for fish, wildlife, plants, or similar ecosystems; or
- is used by the public for outdoor recreation or education.
We work closely with landowners to prepare conservation easements that protect high-quality resources that benefit Alaskans and the health and future of our state. It is important to speak with your own attorney or tax adviser if you are interested in seeking a tax deduction.
In order to claim an income or estate tax deduction, a landowner must first obtain a qualified independent appraisal. Appraisals of conservation easements must meet certain time requirements and include factual information required by the I.R.S.
A donor of a qualified conservation easement may deduct up to 30 percent of his or her adjusted gross income. This is deductible against the donor’s federal income taxes. If the value of the gift is not used up in the first year, the unused portion may be carried forward for five additional years. Special rules apply to the deductibility of land owned less than one year.
As tax rates and regulations affecting charitable deductions fluctuate, it is important for landowners to work closely with their own tax advisers when seeking a charitable income tax deduction.
While tax deductions are rarely the primary motivation behind land conservation, the financial and tax benefits associated with easement donations can make it even more rewarding to protect land important to families and communities in Alaska.
Will conserving my land reduce my property taxes?
Property taxes are a growing concern for Alaskans. Many people wonder if conserving their land will help reduce their property taxes. The answer is—sometimes.
A conservation easement generally reduces the value of property because it removes some of the rights landowners typically hold, such as the right to develop or subdivide their land.
Alaskan assessors are directed to consider the impact a conservation easement has on the value of an individual conserved property. This may lead to a reduction in your Municipality/Borough’s assessment of your property.
In practice, however, many assessors have not adjusted the assessment of conserved properties, although we have had some recent successes we are happy to share.
Conservation easement appraisals
Appraisals are a key part of the process of conserving land. Most people are familiar with appraisals which substantiate the value of real estate, boats, jewelry, or other assets. Appraisals for conservation easements differ in that they identify that value of a property’s “development rights.”
When landowners conserve their land, they are dedicating it, in perpetuity, to agricultural, forestry, educational, and other open spaces uses. In many cases, landowners have given up or limited their ability to subdivide, build a house, or engage in certain commercial uses of their land. These development rights have financial value and can be the basis for claiming a charitable deduction.
A conservation easement appraisal determines the value of development rights in a two-part process. First, the appraiser determines current fair market value of the unrestricted land with no conservation easement. Second, the appraiser determines the value of the land with a conservation easement. The difference between these two values is the value of the development rights.
An individual donating a conservation easement may seek a charitable deduction for the appraised value of the development rights conveyed to Great Land Trust.
When a conservation easement is being sold (rather than donated), the appraised value of the development rights establishes the purchase price.
Appraisals conducted for conservation purposes must be completed by a qualified, independent appraiser and meet other I.R.S regulatory standards.