Rather than sell at fair market value, there are good reasons to consider selling your land to a conservation partner at a reduced price. Whether the price reduction is small or substantial, a bargain sale is a popular option for protecting conservation land. Bargain sellers may get a significant part of their donation returned in tax savings.
- You receive proceeds from the sale of your land (though less than fair market value).
- You may qualify for income tax benefits based on the discounted price of your sale. Meanwhile, your capital gains taxes associated with the sale may become smaller or nonexistent. See the tax case study for a side-by-side comparison of the tax impacts on a bargain sale, fair market sale and full donation.
- Bargain sales can often be accomplished more quickly and effectively than sales at fair market value.
- Conservation groups always have limited funds, and public grants for protection projects are very competitive. Your generosity helps your conservation partner compete for public grants and attract private contributions to complete the purchase.
- Those who donate substantial land value may be given the opportunity to participate in choosing the name that their land will always bear. This can be a wonderful way to honor family or the local heritage.
When you begin to discuss your land’s protection with the conservation agency or nonprofit of your choice, they can help you learn more about all these factors. Iowa Natural Heritage Foundation can provide a first conversation about bargain sales to a conservation agency, if you’re not sure which one might fit your land and situation the best.
Timing deserves discussion. Conservation agencies often need months or years to raise funds for a purchase. Also, your financial advisor might help you identify a year when a charitable deduction can benefit you most.
You can talk with a conservation agency or INHF about ways to ease the purchase process for everyone concerned. For example, your buyer can often help you time your gift to a specific tax year. You might offer special considerations like extended payment terms or an exclusive option to buy that will enable the agency to seek grant support.