June 24, 2024


Mad about real estate

TX Land For Sale-Financial Benefits And Tax Deductions Of Conservation Easements

If you own Texas land and are thinking of a way to get some tax breaks for not only this year but years to come a conservation easement may be your way out of paying Uncle Sam a little more of what is not really his. One thing I will caution before you sign any documents for this type of a life long commitment get professional advice from your attorney and your tax preparer, this is a life long decision you are making. Here are the ways a conservation easement will qualify as a charitable donation. This first qualification is the reason you need tax and legal advice, the easement must be perpetual meaning forever, whether you own the land or your successors this easement will always be there. It must be granted to a qualified organization, either a nonprofit, 501(c) (3) charitable organization with a conservation purpose and the means to enforce the agreement or it must be a local, state or federal agency. The easement must achieve at least one of the following purposes. It must preserve land for public outdoor recreation or education, protects relatively natural habitats of fish, wildlife or plants, preserve open space including farms, ranches or forests either for scenic enjoyment or in keeping with an adopted public policy such as a local open space plan. One last way to qualify is to preserve historically important land or certified historic structures.

For a conservation easement donation to qualify for a federal income tax deduction the following instruments usually will be needed and many will be needed in a TX land for sale transaction anyway. You will need the conservation easement document, an inventory including photographs of the property’s condition at the time of donation listing man made structures, water resources, agricultural and ecological features. A qualified appraisal of the conservation easement prepared by an independent real estate appraiser working for the donor, I will ad here that not just any appraiser will be able to or want to do this appraisal it will be expensive and the federal government will scrutinize it hard. The appraisal must be completed no more than 60 days prior to the donation and no latter than the time the tax return claiming the deduction is filed. A few last things that are a must in a TX land for sale transaction and for this type of agreement, you will need a title report, a copy of the deed and copies of any mortgages with subordination agreements from the mortgage holder, this means if you have a mortgage on the TX land the bank will have to sign the agreement as well. You will need a legal land survey and lastly you will need IRS form 8283 (an attachment to the federal income tax return of anyone claiming a charitable contribution of more than $5,000.00).

This charitable donation is going to cost a good bit of money to get set up and certainly is not for everyone but for the right piece of TX land it can be a great thing for the land as well as the land owner.