Conserving Your Land
If you are interested in protecting your island land from development, begin by reading the following sections. They describe the different options that may be available to you.
• Donating land outright,
• Conservation easements,
• Tax considerations,
• Bargain sales of land, and a
• Glossary of land trust terms.
When considering how to protect your property your lawyer will be best able to advise you.
For more information about donating land, or to discuss whether the Peaks Island Land Preserve would be the best group to which you might donate land, feel free to contact a Board member, write to us, or e-mail us:
Peaks Island Land Preserve
P.O. Box 99
Peaks Island, ME 04108
Donating land outright
An outright donation of land for conservation is a meaningful way to ensure that future generations will enjoy the parts of Peaks Island that you have cherished.
An outright donation to the Peaks Island Land Preserve, a tax-exempt non-profit qualified conservation organization, is a simple transaction. It is the method that provides the maximum possible income and estate tax benefits and fully transfers ownership and management responsibilities.
Donating land may be attractive to landowners who:
1. Own property they no longer use
2. Own highly appreciated property, the sale of which would result in a high capital gains tax
3. Have substantial real estate holdings and wish to reduce their estate tax burden
4. Have heirs who might not protect the land's conservation values
5. Who recognize that greater expertise is needed to protect and manage the land.
If it is the donor's intention that the land never be developed, PILP will place a permanent Conservation Easement on the parcel (which easement will be held by a cooperating land trust such as Oceanside Conservation Trust of Casco Bay) in order to create a legal guarantee that this wish will be honored forever.
There are several methods that PILP uses to preserve undeveloped land on Peaks Island, including what has come to be the most popular tool – Conservation Easements. The Conservation Easement is a method of land conservation that "keeps land in the family" or in private ownership, while ensuring the property's long-term protection.
Customized to the particular needs of each landowner and property, a Conservation Easement is a versatile conservation tool. In placing a Conservation Easement on your land, you formally agree to give up development rights that you otherwise would have. Granting a Conservation Easement may greatly reduce a landowner's burden from estate, income and property taxes.
Each Conservation Easement is a legal agreement in which PILP assumes permanent responsibility for monitoring the property and enforcing the easement terms. If an easement is violated by the donor or a subsequent owner of the property, PILP can take action to have the violation corrected.
Because subsequent owners of the property have to observe the restrictions set forth in the easement, it is truly a way to ensure that certain land will never be developed, or that it will be developed only in a very limited way, while still keeping it in private ownership.
Donation of a Conservation Easement offers tax advantages if the easement provides significant public benefits and meets certain tax code provisions.
Tax considerations of donating land
or granting conservation easements
Many landowners find that certain tax incentives support their choice to conserve land. Donations of land or Conservation Easements can qualify for income and estate tax deductions and a lower property tax assessment. If you are interested in becoming a donor, you should consult with an accountant and a real estate appraiser to determine how the tax code provisions would apply in your particular circumstances. The IRS requires that a "qualified appraisal" be performed by a "qualified appraiser." The Peaks Island Land Preserve can help you identify such appraisers in the Portland area.
The tax implications of your conservation plan will depend on the value of your gift, your financial circumstances and other factors. It is wise to consult with an accountant prior to the donation to understand fully the tax benefits available to you for making a donation or land or an easement.
In every case, to qualify for a federal tax deduction, your donation must be made to an IRS-qualified, tax-exempt organization (like the Peaks Island Land Preserve) or to a government agency. The donation must be complete and irrevocable, without strings or contingencies.
It is important that you understand the options available to you in donating land or Conservation Easements.
Bargain sales of land on Peaks Island for conservation purposes
As a non-profit organization that raises funds from the island community and through grants for its work, the Peaks Island Land Preserve has a small budget, and consequently is unable to purchase land at market rates. However, if a landowner is willing to enter into a bargain sale, chances increase that PILP will be able to afford the purchase.
If you negotiate a bargain sale with PILP, you will receive less financial return than in a market-rate sale, but that loss can be offset by tax savings. The difference between the land's appraised market value and its sale price is considered a tax-deductible charitable donation when given to PILP, which is a qualified organization under IRS rules.
This deduction, combined with savings on capital gains taxes and broker's commissions, can make the bargain sale an appealing option for many landowners – particularly those in higher tax brackets or those selling highly appreciated property.
Land Trust Terms Glossary
Easement In the United States, a conservation easement is an easement – a transfer of usage right – which creates a legally enforceable land preservation agreement between a landowner and a municipality or a qualified land protection organizations (often called a "land trust"), for the purposes of conservation. It restricts real estate development, commercial and industrial uses, and certain other activities on a property to a mutually agreed upon level.
The decision to place a conservation easement on a property is strictly a voluntary one where the easement is sold or donated. The restrictions once set in place, "run with the land" and are binding on all future landowners (in other words, the restrictions are perpetual). The restrictions are spelled out in a legal document that is recorded in the local land records and the easement becomes a part of the chain of title for the property.
Land Management Plan Management Plans are developed to guide and assist landholders to actively manage their land and its associated resources. A plan documents, in plain English, the current status and productivity, the desired future condition and the management practices recommended to achieve those conditions.
The plan records landholders' objectives, an inventory of resources, economic and social conditions, and the management decisions made by landholders and resource professionals to achieve the objectives. It also guides the landholder as to which management activities are to be completed each year.
A plan is a working document, and should be amended as necessary, by the landholder and/or the preparing resource professional, to take into account changing environmental, social and economic conditions. Plans will vary in length and detail depending on the diversity of natural resource needs and situations. The following outline is provided to facilitate the preparation of a management plan.
Monitoring Monitoring refers to repeated systematic observations and evaluation is relating that information to the objectives of a management plan (changes in condition and progress towards meeting management objectives). Monitoring and evaluation provide the documentation of the condition of a managed area and provide a means for reporting changes in vegetation trends. Through the process of monitoring and evaluation, we can also measure progress towards or success at meeting a management objective.
Land Trust Standards and Practices The Land Trust Standards and Practices are guidelines for the responsible operation of a land trust, which is run legally, ethically, and in the public interest and conducts a sound program of land transactions and stewardship.
The Land Trust Alliance originally developed the standards in 1989 at the urging of land trusts, who believe a strong land trust community depends on the credibility and effectiveness of all its members. They have been revised in 2004.
Accreditation The newly formed Land Trust Accreditation Commission, an Independent Program of the Land Trust Alliance, will provide independent verification of the 37 indicator practices from Land Trust Standards and Practices that show a land trust's ability to operate in an ethical, legal and technically sound manner and ensure the long-term protection of land in the public interest. Go to www.landtrustaccreditation.org
Steward A land steward is a volunteer for the organization whose specific role includes monitoring the condition of their assigned parcel. A steward would alert the board of any positive or negative change in the condition or use of the land. The board would then approve any steps taken to improve or continue conditions.
Volunteer Any person willing to help, without compensation. A volunteer need not be a dues-paying member of the organization.
501 (c) (3) Section 501 (c) (3) is a tax law provision granting exemption from the federal income tax to non-profit organizations. This exemption does not cover federal taxes such as employment taxes.
501 (c) (3) exemptions apply to corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster nationals or international amateur sports competition, or for the prevention of cruelty to children or animals.
Prepared with assistance from the Maine Coast Heritage Trust.