Uncategorized
Back 40: Conservation easements and taxes
Published
7 years agoon
Posted By
Outlaw PartnersBy Jessie Wiese EBS Contributor
In the last issue of Explore Big Sky, we explored how conservation easements work and introduced potential benefits available to landowners who donate a conservation easement to a land trust. In this installment, we’ll take a look at associated tax benefits and touch on the process involved to set up an easement.
From a land conservation perspective, conservation easements are the only tool with the capacity to perpetually prevent inappropriate development on private lands containing some of the richest habitat and soils in the state. These lands are integral parts of ecosystems spanning both public and private land, and provide critical resources and habitat connectivity for Montana’s fish and wildlife.
Like all other types of easements, conservation easements are governed under Montana real property law, but federal tax law determines whether the donation of a conservation easement qualifies as a tax-deductible charitable gift. Parties interested in a conservation easement should consult an attorney or other professional with knowledge of the federal requirements, which include the following:
- The conservation easement must be granted in perpetuity, meaning it is of perpetual duration, applies to all future owners, and takes priority over the rights of mortgage and contract-for-deed holders, who must agree to subordinate their rights to the easement.
- The easement must provide at least one of the following four conservation purposes:
- Protection of relatively natural habitat for fish, wildlife, plants, or similar ecosystems
- Preservation of open space that will yield a significant public benefit, for the scenic enjoyment of the general public and/or pursuant to a clearly delineated governmental conservation policy
- Preservation of land areas for the education of, or outdoor recreation by the general public
- Preservation of a historically important land area or structure
- The easement must be granted to a qualified organization, such as a nonprofit land trust or governmental entity.
- The easement must prohibit uses which would destroy the conservation values protected by the easement, including all surface mining. If the easement donor does not own all of the mineral rights, the possibility of surface mining must be determined “so remote as to be negligible.”
- Resource data documenting the condition of the property must be collected prior to donation of the easement.
When a conservation easement meets these federal requirements, and the donor of the easement demonstrates the value of the easement by a detailed appraisal, the donor may be entitled to a reduction in income and/or estate taxes.
Tax benefits
The value of the easement is determined by a qualified appraiser who values the property before and after the easement restrictions are applied. The difference between these two values is the amount of the charitable gift for tax purposes.
Landowners donating conservation easements may deduct the value of the easement against 50 percent of their adjusted gross income, or AGI, for 15 years, in addition to the year in which the easement is completed. Landowners who earn more than 50 percent of their income from agricultural operations may deduct the value of the donated easement against 100 percent of their AGI. Farm and ranch corporations may also be eligible for the 100 percent deduction.
Conservation easements will ordinarily result in a reduction of the property value for estate and gift tax purposes, and can ease the financial burden of passing the property onto heirs, making conservation easements a significant and useful estate planning tool. An additional estate tax incentive for conservation easements can further reduce the taxable estate by up to $500,000.
How to donate an easement:
Once the decision has been made to donate a conservation easement, the landowner and the land trust agree on specific terms, keeping in mind the federal requirements above.
Once the easement is finalized, the land trust and the landowner begin a working relationship to assure that the intended conservation becomes a reality. The easement limits only the broad parameters of land use, such as subdivision and construction, while the landowner continues to preside over day-to-day property management decisions.
Annual monitoring visits are conducted by land trust stewardship staff to foster good communication with the landowner and provide an opportunity to answer questions or respond to concerns. Mutual respect and clear understanding of easement terms help avoid potential conflict and allow for the continued use of this excellent tool for conservation of important lands throughout Montana.
For more information about easements and the work being done in Big Sky, please contact Jessie Wiese at The Montana Land Reliance at jessie@mtlandreliance.org.
The Montana Land Reliance (MLR) partners with private landowners to permanently protect agricultural lands, fish and wildlife habitat and open space. MLR serves all of Montana with satellite offices in Bigfork, Bozeman, Big Sky, and a main office in Helena.
The Outlaw Partners is a creative marketing, media and events company based in Big Sky, Montana.
Upcoming Events
july, 2024
Event Type :
All
All
Arts
Education
Music
Other
Sports
Event Details
CALL FOR ARTISTS: Paint anytime from June 1-28EXHIBITION & SALE: June 29 - July 31Calling all artists and nature enthusiasts! Get
more
Event Details
CALL FOR ARTISTS: Paint anytime from June 1-28
EXHIBITION & SALE: June 29 – July 31
Calling all artists and nature
enthusiasts! Get your paintbrushes ready for an unforgettable experience at
Paint Under the Big Sky, a thrilling plein air event set against the stunning
backdrop of Big Sky, MT, Chet Huntley’s “The Last Best Place”. Don’t
miss this chance to unleash your creativity and be part of a vibrant artistic community.
What is Paint Under the Big Sky? PUBS is a plein air event for all painters of any ability (over the age of 16). Sponsored by the Big Sky Artist’s Studio & Gallery and the Big Sky Artists Collective, a non-profit organization whose mission is to foster a strong community of artists in the Big Sky area, the paint-out hopes to introduce painters to our extraordinary landscape for an opportunity to create, meet and have fun. Plein air painters record our landscape for generations to come.
Artists are invited to travel to Big
Sky, MT to paint anytime between Jun 1 – 28, and participate in the exhibition
and sale of paintings from June 29 – July 31.
Come join us! We have a great
place to paint and are welcoming and fun!
Don’t miss out!
Time
June 1 (Saturday) 1:00 am - July 31 (Wednesday) 11:55 pm
Event Details
Embrace the freedom and serenity of movement in nature with our rejuvenating morning yoga class on the Mountain Lawn. Allow the fresh mountain air and gentle guided yoga practice
Event Details
Embrace the freedom and
serenity of movement in nature with our rejuvenating morning yoga class on the
Mountain Lawn. Allow the fresh mountain air and gentle guided yoga practice to
invigorate your day of adventure ahead. Complimentary. Weather
permitting.
Time
June 1 (Saturday) 7:00 am - August 31 (Saturday) 7:00 am
Location
Montage Big Sky
995 Settlement Trail
Event Details
Bike Big Sky is a FREE community mountain biking group with BSCO and Gallatin Alpine Sports. Meet at posted locations at 6 p.m. Monday evenings. Visit BSCO.org or swing by
Event Details
Bike Big Sky is a FREE community mountain biking group with BSCO and Gallatin Alpine Sports. Meet at posted locations at 6 p.m. Monday evenings. Visit BSCO.org or swing by GAS for ride information.
Time
June 10 (Monday) 6:00 pm - August 19 (Monday) 6:00 pm
Event Details
Bike Big Sky is a FREE community mountain biking group with BSCO and Gallatin Alpine Sports. Meet at posted locations at 6 p.m. Monday evenings. Visit BSCO.org or swing by
Event Details
Bike Big Sky is a FREE community mountain biking group with BSCO and Gallatin Alpine Sports. Meet at posted locations at 6 p.m. Monday evenings. Visit BSCO.org or swing by GAS for ride information.
Time
June 17 (Monday) 6:00 pm - August 26 (Monday) 6:00 pm