Leveraging Conservation Dollars

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Leveraging Conservation Dollars

• Regional Greenways Collaborative/
• Embrace Open Space
• July 17, 2006

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AGENDA

• Acquisition of Land and
• Conservation Easements
• Sale
• Donation
• Bargain Sale
• Conservation Flips
• Examples - Leveraging Your Dollars

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Acquisition of Land and Conservation Easements

• Sale - One-time payment or installment sale
• Donation - qualified deductions against up to 30
  of adjusted gross income per year for up to 6
  years

• Phasing of donation to maximize deduction
• Bargain Sale FMV minus purchase price
• Multiple approaches (e.g. life estate, annuities,
  lease back, etc.)

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Donating a Conservation EasementRunning the
Numbers

• Example 1 Income Tax Benefits
• Land Value 1,000,000
• After Easement 700,000
• Charitable Gift 300,000
• Tax Savings _at_ 35 105,000
• assumes full deduction can be used over 6 years.
• If not, phasing may extend income tax benefits.
• Owner still retains all uses of land not
  restricted by easement
• Sleeves off your vest

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Donating a Conservation EasementRunning the
Numbers

• Example 2 Estate Tax Benefits
• Land Value 1,000,000
• After Easement 700,000
• Addl Exclusion 280,000
• Total Exclusion 580,000
• Potential Estate Tax Savings 261,000
• (assumes total estate exceeds total estate tax
  threshold and is subject to 45 estate tax
  2007/2008 rates on assets over 2 m)
• Plus Income Tax Saving 105,000
• TOTAL Tax Savings 366,000
• Remaining Taxable Value 420,000
• Exclusion for each succeeding generation in
  donors family
• Post-mortem easements - 9 month clock
  foregoes income tax benefit

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Conservation Easements

• Bargain Sale
• Easement Value before and after assessment
• Potential Charitable Value FMV minus purchase
  price
• Deduction - up to 30 of adjusted gross income
  per year for up to 6 years.
• Proceeds taxable and require adjustment in basis
• Estate Tax reduced land value, potential
  prorated additional exclusion

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Land AcquisitionBargain Sale Running the
Numbers
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Land AcquisitionConservation Flips

• Structure purchase, including charitable
  component as possible
• Acquire property
• Place conservation easement or subdivide out
  conservation land
• Take through platting, if necessary
• Consider short-term holding to maximize
  investment return
• Resell
• Reinvest proceeds in other transactions

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RESULTS TO DATE
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