Landowners can choose from these four sale options:
- Fair market value: The landowner sells the property for its fair market value.
- Bargain sale: The landowner sells the property to a land trust, conservation organization or agency at a price below the fair market value. The difference between the sale price and fair market value can be characterized as a donation.
- nstallment sale: The landowner sells the property to a land trust or conservation organization where all or part of the consideration is deferred and paid in successive years.
- Right of first refusal: The landowner gives a land trust or conservation organization the option to match a purchase offer and acquire the land if another buyer approaches the landowner.
- Sale at full market value allows the landowner to receive full value for property.
- Bargain sales offer a tax deduction and reduction of capital gains taxes to the landowner.
- Installment sales can defer the actual capital gains tax until the purchase with which to pay the tax is in hand.
- Right of first refusal can give land trusts and other conservation organizations time to acquire the funds necessary for purchasing the land.
- Most land trusts and conservation organizations have limited budgets and can rarely pay full market value for wetlands.
- If the land value has appreciated since it was purchased, the landowner becomes liable for the income tax on the capital gain
Donation of Land Landowners can choose from three types of donations:
- Outright donation grants full title and ownership to the conservation organization, community or government agency receiving the donated property.
- Donation by deathtime transfers property through a will.
- Donation with a reserved life estate permits the landowner to use the donated property during his or her lifetime and the lifetimes of designated family members.
- Donation provides total protection for a wetland.
- Landowners can receive income tax deductions and possible estate, gift and property tax breaks.
- Land trusts and conservation organizations, which may not have the budget to buy wetlands, can fulfill their mission to protect wetlands.
- Outright donation requires little negotiation and can be completed quickly.
- Donation at deathtime allows the landowner and their family to retain interim control and full use of their property, while ensuring protection after the landowners’ death.
- Donation with reserved life estate allows the landowners and their family to continue to live on the land, while ensuring it future protection.
- The landowner forfeits potential income from the sale of the land.
- Maintenance and other associated costs taken on by the land trust or organization may be more costly than a conservation easement.
- There is no income tax deduction for a donation by deathtime transfer.
- The landowner is responsible for property taxes as long as they remain in possession of the land.
- Many land trusts may not be able to accept the donation without additional funding for an endowment to support long-term management of the property. Tax relief from donation with a reserved life estate generally applies to farms and personal residences, and in some cases wetlands may not qualify.