Land Conservation in Coastal Alabama

Transcription

1 Lad Coservatio i Coastal Alabama OPTIONS FOR LANDOWNERS Alabama Ladower Guide

2 Photo Credit: Isaac Marti Lad Coservatio i Coastal Alabama Coastal Alabama has may beautiful atural areas that local families have ejoyed for geeratios: beaches ad bays, rivers ad creeks, as well as farmlad ad forests. Protectig these atural areas provides umerous beefits for local residets icludig safe drikig water ad outdoor recreatio. These atural assets are also the backboe of our tourism-based ecoomy. But for may local ladowers, the most importat beefit of all is protectig the lad they love for the people they love. This booklet is for ladowers who wat to lear more about the optios available for coservig their atural lads, icludig: Doatig a coservatio easemet Doatig or sellig lad for less tha fair market value Sellig the lad to a lad trust or govermet agecy Lad trusts ca help ladowers fid the right solutio, oe that fits the eeds of their family ad fiacial situatio, while coservig lad i the most appropriate way. What Is a lad trust? A lad trust is a oprofit orgaizatio that works with willig ladowers to coserve lad. Lad trusts coserve lad through holdig coservatio easemets, acceptig doated lad, ad purchasig lad. I Coastal Alabama, lad trust staff ad board members build relatioships with ladowers ad help them accomplish their goals. Lad trusts across the coutry have bee successful i protectig more tha 47 millio acres, a area larger tha the state of Missouri. These orgaizatios protect ad maage lad i perpetuity forever. There are over 1,000 lad trusts throughout the coutry.

3 LAND CONSERVATION OPTIONS Coservatio Easemets A coservatio easemet ca make a critical differece i a family s ability to pass lad from oe geeratio to the ext. This flexible tool coserves lad while allowig a ladower to keep the lad i the family. A coservatio easemet is a legal agreemet i the form of a perpetual deed restrictio betwee a ladower ad a qualified coservatio orgaizatio (such as a lad trust) or govermet agecy that permaetly limits a property s uses i order to protect its coservatio values. A coservatio easemet offers several advatages: It leaves the property i the owership of the ladower, who may cotiue to live o it, sell it or pass it o to heirs. Uder a coservatio easemet, the property ower must maage the lad accordig to the agreemet or deed restrictio. It may sigificatly lower estate taxes sometimes makig the differece betwee heirs beig able to keep lad i the family ad their eedig to sell it. I additio, a easemet may provide the ladower with icome tax beefits ad, i may cases, property tax beefits. It is flexible ad ca be writte to meet the particular eeds of the ladower while coservig the property s atural, historic, sceic ad/or cultural resources. It is permaet, remaiig i force whe the lad chages hads. A lad trust or govermet agecy esures that the restrictios are followed. How Coservatio Easemets Work Ladowers have may rights associated with their lad icludig rights to harvest timber, build structures, grow crops ad so o (subject to zoig ad other restrictios). Whe ladowers doate or sell a coservatio easemet to a lad trust or govermet agecy, they permaetly give up some of those rights. For example, a ladower might give up the right to build additioal resideces, while retaiig the right to grow crops. Future owers will also be boud by the easemet s terms. Coservatio easemets are developed collaboratively by the ladower ad the lad trust or govermet agecy that will hold the easemet. The easemet is a detailed legal agreemet that outlies the restrictios o the ladower s uses of the property ad the Photo Credit: Yael Girard resposibilities of the ladower ad the etity that holds the easemet. The parties will work together to maitai the terms of the easemet. The holder of the easemet will otify the ladower of ay violatios to the easemet, ad the ladower will be resposible for addressig ay issues. Alabama Ladower Guide 1

4 Qualifyig for a Federal Icome Tax Deductio The doatio of a coservatio easemet that meets certai requiremets of the tax code may qualify as a tax-deductible gift. These requiremets iclude a provisio that the easemet must be doated i perpetuity; term easemets, which are put i place for a set umber of years, do ot qualify. The easemet must be doated to a qualified charitable orgaizatio, such as a lad trust or govermet agecy, that has the resources to eforce the easemet. Ad it must be doated exclusively for coservatio purposes, defied i the Iteral Reveue Service 170 tax code as accomplishig at least oe of the followig: The preservatio of lad areas for outdoor recreatio by, or the educatio of, the geeral public The protectio of relatively atural habitat for fish, wildlife or plats or similar ecosystems The preservatio of ope space (icludig farmlad ad forestlad), where such preservatio will yield a sigificat public beefit ad is either (1) for the sceic ejoymet of the geeral public or (2) pursuat to a clearly delieated federal, state or local govermetal coservatio policy The preservatio of a historically importat lad area or certified historic structure I essece, the icome tax deductio is reserved for the preservatio of coservatio resources that truly provide sigificat public beefit. However, a easemet does ot have to cover all of the property, preclude all use or developmet, or allow public access i order to qualify for a charitable deductio. The Size of the Icome Tax Deductio For icome tax purposes, the value of a coservatio easemet is the differece betwee the value of the lad with the easemet ad its value without the easemet. This value is determied by a qualified appraisal of the coservatio easemet performed by a certified geeral appraiser. For example, a property that is worth $500,000 o the ope market could be subdivided to build several homes. Istead of sellig for $500,000, the ladower doates a easemet o the property to the local lad trust. The easemet precludes further developmet. The fair market value of the lad with the easemet s restrictios i place is $200,000. The value of the doatio is cosidered to be $300,000 ($500,000 $200,000 = $300,000). There are limitatios o how much a taxpayer ca deduct. Doatig a Remaider Iterest A ladower ca doate lad but cotiue to live o it by doatig a remaider iterest i the property ad retaiig a reserved life estate. The property is doated durig the ladower s lifetime, but the rights are reserved for him or her ad other amed persos to cotiue to live o ad use the property durig their lifetimes (called a reserved life estate). Whe the ladower or those who have bee desigated o loger live o the lad, the lad trust takes owership. 2 For more iformatio o Iteral Reveue Service rules o tax beefits for lad coservatio, cosult a lawyer ad review the IRS 170 tax code.

5 For doatios of coservatio easemets, ad certai doatios of lad, a ehaced federal charitable deductio is allowed provided that certai requiremets are met. Doatig the lad will also remove its value from the estate, reducig future estate taxes. Property taxes may be lowered i some areas, depedig o the type of property. Doatig lad is ofte especially attractive to ladowers: Whose lad has sigificat coservatio values ad who do ot have heirs or whose heirs caot or will ot protect it Who ow property (such as a vacatio retreat) that they o loger use Who ow highly appreciated property, the sale of which would result i large capital gais taxes Who have substatial real estate holdigs ad wish to reduce estate tax burdes Who would like to be relieved of the resposibility of maagig ad carig for lad that they otherwise treasure Doatig lad for coservatio is truly oe of the fiest legacies a perso ca leave to future geeratios. Commuities across the coutry are ejoyig ature preserves, recreatio areas, sceic vistas ad other ope spaces today because of the foresight ad geerosity of ladowers who have made gifts of their lad. Doatig a Remaider Iterest A ladower ca doate lad but cotiue to live o it by doatig a remaider iterest i the property ad retaiig a reserved life estate. The property is doated durig the ladower s lifetime, but the rights are reserved for him or her ad other amed persos to cotiue to live o ad use the property durig their lifetimes (called a reserved life estate). Whe the ladower or those who have bee desigated o loger live o the lad, the lad trust takes owership. Sale of Lad for Fair Market Value Sellig the lad at fair market value to a lad trust may seem a obvious way to coserve it. But lad trusts usually have very limited fuds for lad purchases as oprofits, they ca rarely afford to pay the same prices that a developer would offer. They are also restricted to payig o more tha fair market value. Lad trusts geerally reserve fair market value purchases, whe they ca make them at all, for highly sigificat parcels uder immiet threat of developmet. A fair market value sale is ofte ot as advatageous for the ladower as it might seem. Capital gais taxes o the property s appreciated value, alog with sellig costs, such as the realtor s commissio, ca substatially reduce the profits from a fair market sale, particularly for ladowers i higher tax brackets who are disposig of highly appreciated property. Bargai Sale Oe alterative to a fair market value sale is a bargai sale, i which the lad is sold at less tha its fair market value. A bargai sale combies the icome-producig beefit of a sale with the tax-reducig beefit of a doatio. It ca also avoid the expeses of a sale o the Alabama Ladower Guide 3

6 ope market. The differece betwee the lad s appraised fair market value ad its sale price is cosidered a charitable doatio to the lad trust ad ca be claimed as a icome tax deductio. How a Bargai Sale Affects Federal Icome Tax Tax law treats a bargai sale as beig i part a taxable sale ad i part a charitable doatio, provided that the parties to the trasactio clearly state their itet that it be treated as a partial charitable cotributio. The sale may be subject to capital gais tax; the charitable doatio may result i a icome tax deductio. I this example, a couple purchased a farm i 1950 for $20,000 (the basis). Whe they decided to sell the farm, it s fair market value had icreased to $500,000. They sold the farm to a lad trust for $200,000. The charitable doatio was cosidered to be the differece betwee the fair market value of the lad ad the sale price ($500,000 $200,000 = $300,000). Substatiatig the Value of Gifts I order to take a tax deductio for gifts worth more tha $5,000, icludig lad or coservatio easemets, the ladower must obtai a qualified appraisal by a qualified appraiser (cash ad publicly traded securities are exceptios). The tax code outlies specific iformatio that must be icluded i a appraisal. How a Lad Trust Ca Help You Lad trusts ca help i a umber of ways: They help ladowers accomplish their goals by idetifyig the best coservatio optios for their situatio. They provide referrals to attoreys, appraisers, accoutats, biologists, foresters ad lad plaers familiar with coservatio strategies. They serve as recipiets of coservatio easemets ad lads that they promise to coserve forever. I additio, most lad trusts are public charities as defied by the federal tax code, ad doatios of lad, qualified coservatio easemets, or cash ad securities to them are tax deductible. The Importace of Legal ad Fiacial Advice A lad trust ca provide a array of iformatio ad assistace, but there are a umber of thigs it caot do. A lad trust caot provide legal or fiacial advice or guaratee that a particular coservatio pla is best for ladowers persoal ad fiacial circumstaces. It caot state uequivocally that a particular coservatio easemet will qualify for a tax deductio or say how much the deductio will be. Ladowers must get their ow idepedet advice from kowledgeable attoreys ad fiacial advisors, ad, of course, they are resposible for the fial decisio. 4

7 LAND CONSERVATION OPTIONS Lad Coservatio Optio Descriptio Results Icome Tax Deductio?* Estate Tax Reductio?* Coservatio easemet Legal agreemet betwee a ladower ad a lad trust or govermet agecy permaetly limitig a property s uses. Lad s coservatio values coserved by orgaizatio. Ower cotiues to ow, use ad live o lad. Outright lad doatio Lad is doated to lad trust or agecy. Lad trust ows ad coserves lad. Doatio of lad by will Lad is doated to lad trust or agecy at death. Lad trust ows ad coserves lad. No Doatio of remaider iterest i lad with reserved life estate Lad is doated to lad trust, but ower (or others desigated) cotiues to live there, usually util death. Lad trust ows ad coserves lad. Bargai sale of lad Lad is sold to lad trust or agecy for a price below fair market value. Lad trust ows ad coserves lad. Mutual coveats A group of ladowers agree to restrictios o their lad use. May ot ivolve a coservatio group. Ca be ullified by subsequet agreemet of owers. No No * I most cases. The amouts of icome tax ad estate tax reductio deped o a umber of factors. For property best kept i private owership, the lad trust may place a coservatio easemet o the property to coserve it ad sell it to a appropriate buyer. For o coservatio property doated to geerate icome for the lad trust, the lad trust will sell the property. Cash from the sale i either case will be used to support the lad trust s coservatio programs. Remaider iterest oly geerates a charitable deductio if the property is a farm or persoal residece; it does ot apply to other real property. Alabama Ladower Guide 5

8 RESOURCES FOR COASTAL ALABAMA LANDOWNERS Alabama Cooperative Extesio Service. Iformatio for ladowers about stewardship ad maagemet, from small residetial properties to large agricultural operatios. Olie iformatio ad oe-o-oe techical assistace are available. The Alabama Smart Yards Guidebook. This guidebook provides tips ad advice for homeowers o carig for their residetial properties, icludig plat selectio, waterig ad pesticide guidelies, ad icreasig habitats for birds, butterflies ad other beeficial wildlife. Coservatio Easemets Made Easy. This summary of easemets provides helpful iformatio about the process of doatig a coservatio easemet. Federal Ehaced Tax Icetive. The federal govermet allows for some fiacial icetives for ladowers who doate coservatio easemets o their property. The ehaced easemet icetive has three elemets: a 50 percet deductio for doatig a coservatio easemet a 100 percet icome deductio for qualifyig farmers ad rachers a 15-year carry-forward period for a door to take tax deductios for volutary coservatio agreemets. Forever Wild Lad Trust. The State of Alabama has a lad acquisitio program Photo Credit: Dauphi Islad Birders which purchases lad for public recreatio ad the protectio of atural resources. Idividuals ca omiate particular tracts of lad for purchase; after a review process, the Forever Wild Lad Trust Board of Trustees may the make a offer to buy that tract at the appraised fair market value. For each tract the Board acquires 15 percet of the appraised value is also deposited ito the program s stewardship accout to cover future lad maagemet eeds. Shorelie Protectio Alteratives. This resource cotais examples of differet shorelie protectio strategies with guidace o which strategies work best i differet coditios. Property owers are ecouraged to cosider several factors i choosig the best optio for their situatio, icludig shorelie type, amout of erosio ad wave actio. 6

9 LAND TRUSTS AND LAND CONSERVATION IN COASTAL ALABAMA The Alabama Forest Resources Ceter The Alabama Forest Resources Ceter is a statewide lad trust that works with forest ladowers to help them protect their workig forests ad wildlife habitat from developmet pressures. AFRC holds 56,000 acres of coservatio easemets. Ladowers who are searchig for ways to protect their workig forests ad wildlife habitat for themselves ad for their heirs, while cotiuig to use the lad for their idividual beefit, are ecouraged to cotact AFRC. 8 St. Joseph Street, Mobile, AL CL: y PH: Alabama Coastal Heritage Trust This lad trust protects fragile coastal lads o Fort Morga ad Dauphi Islad by workig with willig sellers to purchase lad. Coastal heritage protects the area s most threateed ad edagered species such as estig sea turtles, the Alabama beach mouse ad migratory birds. The properties are the coveyed to agecies like the Alabama Departmet of Coservatio ad Natural Resources ad the U.S. Fish ad Wildlife Service Bo Secour Natioal Wildlife Refuge. These lads are protected i perpetuity, allowig access to the public for recreatioal ad sceic ejoymet. Coastal Heritage also supports other orgaizatios i their efforts to raise awareess of ad restore Alabama s coastal resources Govermet Street, Mobile, AL PH: EM: alabamacoastalheritagetrust@gmail.com Coastal Lad Trust CLT works to protect the Mobile-Tesaw Delta i South Alabama. Workig with agecies, political leadership ad other private etities, CLT protects lad ad water withi the Mobile-Tesaw Delta, alog with the associated tributaries ad adjacet uplads. The Coastal Lad Trust seeks to preserve all types of atural systems; establish ature preserves or other protected areas; promote the coservatio ad proper use of the area s atural resources; promote the study of ature, preservatio ad coservatio. Dauphi Islad Bird Sactuaries Dauphi Islad Bird Sactuaries is dedicated to preservig atural areas o Dauphi Islad for the may species of migratory birds that deped o the islad. Their objectives are to: 1) Maitai a etwork of quality stopover habitats. 2) Work with govermet ad other agecies to esure a balace betwee huma lad uses ad coservatio. 3) Educate ladowers about practices that stregthe the islad s uique ecosystem. 4) Promote the ecoomic value of ecotourism by attractig more birders to Dauphi Islad. P.O. Box 1295, Dauphi Islad, AL Alabama Ladower Guide 7

10 Pelica Coast Coservacy The missio of the Pelica Coast Coservacy is to provide 21st-cetury solutios ad soud scietific applicatios for coservatio of critical atural resources throughout the Gulf Coast regio. They work with ladowers across coastal Alabama to help them realize their coservatio goals. 403 Coti Street, Mobile, AL PH: The Coservatio Fud Alabama The Coservatio Fud is a atioal orgaizatio that operates i coastal Alabama. Gulf Coast staff members work with local ladowers to protect lad ad water resources with high coservatio value. The Coservatio Fud has resources that allow it to parter with coservatioists, govermet agecies, commuity leaders ad lad trusts to swiftly protect properties for wildlife, recreatio ad/or historic sigificace. 812 Park Ave., Suite D, Madeville, LA PH: The Nature Coservacy Alabama The missio of The Nature Coservacy is to coserve the lads ad waters o which all life depeds. They use the best available sciece, a creative spirit ad a ocofrotatioal approach to craft iovative solutios to complex coservatio problems at scales that matter ad i ways that will edure. The Nature Coservacy respects the eeds, values ad traditios of local commuities ad cultures. 118 N. Royal Street, Suite 500 Mobile, AL y PH: The Trust for Public Lad Alabama The Trust for Public Lad works to protect the places people care about ad to create close-to-home parks. Their goal is to isure that every child has easy access to a easy access to a safe place to play i ature. They also coserve workig farms, raches ad forests; lads of historical ad cultural importace; rivers, streams, coasts ad watersheds; ad other special places where people ca experiece ature close at had. P.O. Box 16667, Jackso, MS PH: Weeks Bay Foudatio This atioally accredited lad trust strives to protect the edges of Alabama wetlads where the state s coastlie meets the waters of the Mobile ad Weeks Bays. The WBF supports the Weeks Bay Natioal Estuarie Research Reserve i its efforts to coserve the pristie coastal area of Baldwi Couty, Alabama. The Foudatio, with over 550 members, supports the Reserve through doatios of lad ad educatio programs, water quality moitorig efforts ad voluteer programs. The WBF has protected over 7,000 acres of coastlie withi Baldwi Couty through a combiatio of coservatio easemets, lad doatios ad purchases U.S. Hwy. 98, Fairhope, AL PH:

11 We exted our sicere appreciatio to those who cotributed to this brochure, icludig Walter Erest, Meg Goecker, Judy Haer, Da Dumot, Yael Girard, Judy Steckler, Christia Naey, Sissy Ly, ad Elizabeth Barber. We especially thak the Lad Trust Alliace for grat support for this project, ad for allowig the Gulf Partership to adapt iformatio from Coservatio Optios: A Ladower s Guide to Coservig Your Lad for Future Geeratios. Sylvia Bates served as Executive Editor ad Mary Burke served as Maagig Editor for the Lad Trust Alliace guidebook. Photo Credits: Boat o Water: Mary Smith y Pelica: Dauphi Islad Birders y Black Bear: Fotaie Howard y Voluteers: Yael Girard y Audubo Sactuary: Dauphi Islad Birders

12 955-A Howard Aveue P.O. Box 564, Biloxi, MS gulfpartership.org Lad Coservatio i Coastal Alabama: Optios for Ladowers Published March, 2018 Partership for Gulf Coast Lad Coservatio Julia Weaver, Editor Laura Tolar, Desig