Benefits to saving land in Provincetown

Landowners have several options for considering land donations to Land Trusts. Most of which give the landowner incredible tax reliefs and benefits. Below are some examples of donating land to a Trust like Provincetown Conservation Trust.

If you are interested in donating a parcel, or a full lot of land to us, please contact Mark Robinson of The Compact for Cape Cod Conservation Trust.

Gifts of Land

Outright Donation (Fee Simple Transfer)

Giving the land to a non-profit conservation organization or to a government agency is the simplest way to protect land. It is only necessary to obtain acceptance from the agency or organization to whom the land will be donated, prior to deeding the land. A gift insures long-term protection of the land. The donor receives tax benefits in the form of federal income tax deductions, potential estate tax benefits, and relief from property taxes. The donor is relieved of management responsibilities, and automatically absolved of liability associated with any trail use.

Donation by Will

A gift of land made through a will entitles the donor to retain full use of the land during his or her lifetime and assures that it will be cared for in the future. It is advisable to discuss the gift with the agency or organization prior to inclusion in a will, to insure a plan for the care of the land. The donor is responsible for real estate and income taxes for the property during his or her lifetime. But removing the land from an estate will reduce inheritance taxes.

Donation with a Reserved Life Estate

A donation with a reserved life estate may be made to a government agency or conservation organization. The donor retains the use of the land during his or her lifetime, and the lifetimes of specified family members. A reserved life estate insures that the land is protected in perpetuity, yet allows the donor to reside on it and maintain the land. The tax advantages with a retained life estate are less that those with an outright donation.

Sale of Land

Sale at Fair Market Value

Sale at fair market value is the sale of property at the price a knowledgeable buyer would pay for the land. Most conservation organizations are not able to purchase land at full value owing to the high cost of land and insufficient funds. If the land is sold at full value and has appreciated in value since its purchase, the seller will be liable for income tax on the capital gain. This can affect the net profit from the sale. There are no charitable deductions associated with a sale at full value.

Bargain or Charitable Sale

A bargain sale is part donation and part sale to a government agency or non-profit organization. A bargain sale may entitle the seller to an income tax deduction for a charitable contribution and to a reduction in capital gains tax. The value of the income tax charitable contribution for the seller equals the difference between the fair market value and the lower negotiated selling price for charity. The net cash to the seller at the bargain price may approximate the fair market sale when the tax deduction is taken into account.

Installment Sale

An installment sale allows an agency or organization to purchase property over a period of years. The use of the land and the responsibility for payment of property taxes until the sale is complete are negotiable terms of the agreement. The seller benefits financially by spreading the income and the taxable gains over several years. The amount of taxable gains depends on whether or not the land is sold at fair market value.

Conservation Restrictions or Easements

Conservation Restrictions

A conservation restriction, also known as a conservation easement, is a legally binding agreement between a landowner and an agency or organization. The landowner retains title to the property, but extinguishes certain development rights in the property.

Deed Restrictions

Deed restrictions guiding the future use of property may be placed in the deed at the time the property is transferred. Deed restrictions differ from conservation easements in that there is not a third party that assumes responsibility for monitoring and enforcing the restrictions placed on the land. The seller is responsible for enforcing restrictions placed on a parcel of land before it is sold. If the seller has placed restrictions in the deed, and retains no land nearby, he or she may not be able to enforce the restrictions against the subsequent owners of the land. Under Massachusetts common law, most deed restrictions expire after 30 years.

(Content sourced from Harwich Conservation Trust and the Compact of Cape Cod Conservation Trusts).