Photo by George Gress

Land Preservation Using a Land Trust: Protecting Our Natural Heritage

Open green spaces. Waterfalls trickling down the side of a mountain. Old barns and farmhouses. Vast spans of sun-kissed cornfields.

Do we take these natural beauties for granted? Ellen Lott, Project Manager for The Nature Conservancy, believes the people of Monroe County are very conservation minded. “People who grew up here value the rural beauty and way of life, and people who move to this area come to enjoy it,” Lott says.

The Nature Conservancy is the leading conservation organization working around the world to protect ecologically important lands and waters for nature and people. It is responsible for protecting 18 million acres in the U.S. and helping to preserve 117 million acres in Latin America, the Caribbean, Asia and the Pacific.

In the early 1990’s, The Nature Conservancy established a local office in Long Pond, Pennsylvania to protect the Pocono area, which was named one of the Last Great Places in the world because of the high concentration of rare species found here and the threats to our landscape. In Northeastern Pennsylvania, The Nature Conservancy has protected or helped to protect more than 38,600 acres of extraordinary lands. Well-known local spaces in Monroe County on that list include the Tannersville Cranberry Bog, Blakeslee Farm, Long Pond, and areas of Cherry Valley, including the Cherry Valley Winery, to name a few.

The Nature Conservancy is one of several land trusts working in Monroe County. Land trusts arrange for the legal protection of land and can apply to county, state, and/or township open space programs for funding to protect land.

In 1998, Monroe County residents voted yes on a $25 million bond referendum to help protect the County’s precious open spaces, natural areas and water resources. For every dollar the county invested in protecting open space, this successful, award-winning program garnered at least two dollars in matching funds from state and other sources, leveraging almost $75 million of land conservation value.

After the initial $25 million was committed, the county provided an additional $11 million for open space protection. In total, approximately 18,000 acres of land and water have been protected in our county. “But, for every one acre protected in the first decade, three acres were developed,” Lott says. We still have the luxury of driving down rural roads and experiencing vast spans of green scenery, but if we don’t look to continue protecting our land we could still see major shifts in our landscape. Most of the land you’ll see while on a Sunday drive still isn’t protected. Lott says that a future referendum is a possibility. Citizens could again have the opportunity to vote in support of additional funding for land and water protection.

Currently, funding is in low supply, but the conservation organizations are working hard to continue preserving as much land as possible. Lott stresses the urgency to keep moving forward. “We must act now to protect Monroe County’s natural heritage, family farms, and special character before they are lost forever. With land prices at historic lows, now is the time to preserve land before it’s too expensive, or too late.”

Many people confuse land preservation with Monroe County’s “Clean and Green” program. While enabling landowners to apply for a significant reduction in property taxes in exchange for non-development of the property, lands in “Clean and Green” are not permanently protected, as they would be through a land trust.

“Nothing is more important than having clean water to drink and clean water in our lakes and streams. We have to ensure that we have a reliable supply of clean water. That comes from protecting the lands around and along our waterways,” Lott says.

By J. Renee Olson

J. Renee Olson is an author, blogger, and writer living in the Pocono Mountains. For more information, or to read her blog, visit www.jreneeolson.com
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If you love your property and wish to conserve it, you can contact a land trust. Your property will be evaluated for extraordinary ecological value—habitat and unusual plants and animals are important—and if it’s a candidate for preservation, they will review options with you.

Basic options include:
• Donate your property to a land trust.
• Donate a conservation easement.
• Sell your property to a land trust.
• Sell a conservation easement to a land trust.

Visit www.nature.org or call the Long Pond office at (570) 643-7922 for more information.

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Tax Impacts of Transferring Property to a Land Trust

When Ben Franklin said nothing is certain but death and taxes, he undoubtedly never envisioned a tax code as convoluted as ours is today. Taking the time to understand the tax benefits of land preservation and plan accordingly can literally pay.

• When donating property outright to a land trust, you are foregoing funds you would have received in a sale. However, as long as the donation meets IRS criteria you should be entitled to a charitable deduction on your tax return. How much depends on a few factors.

For property owned more than one year, you may deduct the fair market value of the property, up to 30% (or 50% if you choose) of your adjusted gross income for that year. For values more than the limit, don’t worry—you can carry it forward for up to five years. This can be a nice bonus with property that did not cost you much to acquire but has gained substantial value. What if your property has gone down in value? Unfortunately, you’re limited to the fair market value, not your cost.

For property owned less than one year, the deduction is limited to the fair market value less the amount that would be a short-term gain if you sold it at fair market value.

The tax you will save is typically your marginal tax bracket, multiplied by the deduction. If tax rates do rise in 2013, it will be worth a bit more.

For property valued at more than $5,000, you must have it appraised by a qualified appraiser no sooner than 60 days prior to the donation and no later than the tax return due date. The donee organization cannot act as your appraiser.

• The deduction for an easement follows similar rules. Your deduction amount is the difference between the appraised value before the donation and the value after.

• Selling your property outright puts cash right in your pocket, but you will likely hand over a piece to Uncle Sam. For property owned longer than one year, you are allowed long-term capital gains treatment on your profit, which for 2012 means the gain will be taxed at a maximum of 15%. Short-term property is taxed at your ordinary income tax rates.

Here’s another case where the potential change in the tax code can help or hurt you. In 2013, the rates for both short term and long term gains are expected to increase. Should the Bush tax cuts be extended, we will have a reprieve. However the Affordable Care Act adds a 3.8% surtax on investment income for taxpayers over the threshold amounts. It’s hard to predict what will happen, but it appears if you plan to sell and have the opportunity to choose between 2012 and 2013, you’ll want to close in 2012.

You may find yourself in the position of selling property to the land trust at a bargain. In that case, you’ll have a combination of a tax deduction for the amount of the discount, and capital gain on the rest.

• The tax treatment for selling an easement is similar, but figuring your cost basis can be tricky. You must allocate your cost basis among the entire property, and assign a portion to the easement based on that ratio. Your gain then, is the difference between that cost basis and what you received.

Tax rules are complicated, no doubt, but the good deed of transferring your property to a land trust can put some cash in your pocket along with a good feeling in your soul.

Disclosure: Please note this information is intended to be general in nature and not all-inclusive of tax regulation. You should consult your tax professional for advice pertaining to your individual situation.

Erin Baehr is a Certified Financial Planner™ and Enrolled Agent. She is the owner of Baehr Family Financial, a fee-only financial planning practice in Stroudsburg, focused on educating families to make the best use of their money in light of their values.

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