The most popular methods for donating, selling or owning land for conservation are:
The less common options below apply only in specialized circumstances and/or in combination with other methods. Not all conservation groups use these options, while others will do so only in exceptional cases.
Donation of non-conservation land
You can support a conservation organization’s mission by donating land that does not have significant natural, scenic or recreational features (such as building lots or commercial property) with the understanding that the donated land can be sold and the proceeds used to purchase conservation land or meet other goals. In most cases, your donation is fully tax-deductible.
Donation of a partial interest
Rather than donating your land as a whole, you can donate an undivided partial interest in your land to a conservation organization — meaning that you donate a specified percentage of the rights, income and responsibilities on the property as a whole. For example, you could keep a 60 percent undivided interest in your land and donate the other 40 percent to a conservation partner.
The donated portion of an undivided interest is often tax-deductible. Some donors donate over multiple years to maximize those deductions — perhaps donating a 50 percent undivided interest one year and the remaining 50 percent three years later. In this way you could "phase in" a donation of natural land as well as transition the land ownership responsibilities.
As co-owners, you and the recipient are classified as tenants-in-common. As such, you are each responsible for your pro rata share of expenses and are each entitled to your share of income from the property.
Donating an undivided interest to a conservation organization may be appropriate for land with limited or no conservation assets. In such cases, you and your partner(s) may choose to sell the entire property and split the proceeds accordingly. If only part of your land has conservation value, you can sell the non-sensitive areas and use the proceeds to protect the remaining land and/or additional conservation sites.
Donation to pay inheritance tax
If you inherit land that a state or county agency is interested in owning for public purposes, you may be able to donate the land to the public agency as partial payment of your state inheritance tax. Talk with your legal advisor or see Section 450.6, Code of Iowa, for details.
Donation to establish a lifetime income
You can donate land (or stock or other assets) to a conservation group in exchange for a life income agreement, commonly called a charitable gift annuity. Annuities provide you with regular payments throughout your life. The payment rate is based upon your age and the gift value. You may qualify for partial income tax benefits or reduce capital gains taxes.
Gifts of income-producing land can work well to provide lifetime income as well as support for a conservation organization. Donating natural land for protection as well as lifetime income can be more complicated.
A like-kind exchange allows you to trade income or investment property for other property. Because the transaction is considered a trade rather than a sale, you can defer capital gains taxes on the relinquished parcel until you sell the replacement property.
Conservation groups are often eager partners for landowners who want to trade lower-quality farm ground for better ground. Unlike the typical farm buyer, conservation groups prefer low-lying ground with wetland features, highly erodible slopes with native prairie or “rough” ground that might contain unique species.
Like-kind exchanges are covered under Section 1031 of the Internal Revenue Code. Its rules are very complicated, so be sure to consult with a professional tax advisor.
When you sell, donate or transfer land to anyone, you can give it short-term protection by placing language in the deed to restrict how it can be used. These restrictions remain in effect for only 21 years. The deed restriction also designates benefited parties — such as neighbors or a conservation partner — who have the right to re-record the restrictions and extend their provisions for additional 21-year increments and to enforce the restrictions.
Deed restrictions are much simpler to put in place than conservation easements. However, because they don’t offer the consistent monitoring, enforcement and permanence of conservation easements, deed restrictions generally aren’t the preferred option for sites with particularly rare or sensitive natural resources. They also do not qualify as a charitable contribution for income tax purposes.
Some of Iowa’s preserves are public lands, while others are privately owned with no public access. If you own land with exceptional biological, geological, historic, archaeological or scenic features, you might apply for “state preserve” status, even while maintaining private ownership. In this case, a management plan is written with oversight and guidance from the State Preserves Advisory Board and the Iowa Department of Natural Resources staff. The landowner, the State Preserves Advisory Board, and the governor must agree to permanent restrictions. See Chapter 465C, Code of Iowa for details.
If you’re not ready to transfer land to a conservation agency or organization, some organizations may be willing to lease the land for conservation uses and management. A long-term lease (paid or free) can help a landowner manage or enhance a natural area, but it does not guarantee permanent protection to the land and its resources. For example, this arrangement can cause problems if the owner dies without making provisions for the land’s long-term ownership and management.
Conservation leases between landowners and their cropland tenants can also help ensure that your farmland is managed with soil health, habitat and water quality in mind. The Drake Agricultural Law Center provides sample leases, legal background on leases and videos.
Neighbors who share conservation goals may record similar restrictions on their properties and then share the responsibility of enforcing the restrictions. Mutual covenants aren’t as strong or long lasting as conservation easements, but they can work with the right combination of people and circumstances. Mutual covenants do not qualify for income tax benefits.
Farm debt cancellation
Persons with Rural Economic and Community Development (RECD) loans that are secured by real estate may be able to cancel part of the RECD debt in exchange for donating a conservation easement. To be eligible, the land must have significant conservation values. There are no income tax benefits associated with this option.