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LandTrust for Central NC - Two Rivers Seminar

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A basic description of how the LandTrust for Central NC operates.

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LandTrust for Central NC - Two Rivers Seminar

  1. 1. The LandTrust For Central North Carolina
  2. 2. DAVIE IREDELL DAVIDSON RANDOLPH ROWAN CABARRUS STANLY MONTGOMERY Yadkin River Basin RICHMOND ANSON
  3. 3. # # # # # # # # # # # # # # ## # # # ## # # # # # # # # # # # # # # # # # # # # # # # # • 47 projects completed • 5702 acres protected • 4909 acres planned/pending
  4. 4. Conservation Easements  Legal restriction on how property can be developed into the future.  Have been in use for nearly a century, and courts have universally upheld.  Usually perpetual (permanent), although can be done for term of years  Holding entity can be local land trust, local Soil and Water Conservation District, National Land Trust, or “sham” non-profit
  5. 5. Conservation Easements (Cont)  Flexible documents custom tailored to each property or landowner  Require baseline documentation and establishment of property’s resources to be protected  Become LIABILITY of holding conservation organization! Must be monitored, and violations must be corrected.
  6. 6. Conservation Values Wildlife Rivers/Streams Historic Scenic Education Farmland Habitat Riparian Land Properties Vistas Recreation
  7. 7. Natural Heritage Inventory N Inventory Completed Inventory Not Begun Inventory Underway W E 20 0 20 40 Miles S
  8. 8. WHY ?
  9. 9. 1900 acre Cooleemee Plantation
  10. 10. Pisgah Covered Bridge
  11. 11. 300 acre South Yadkin Refuge
  12. 12. Eagle Point Park
  13. 13. 317 acre John Green Farm
  14. 14. Clarke Creek Blue Heron Rookery
  15. 15. Implementation & Conservation Economics 101 …Doing Well While Doing Good…
  16. 16. Who Can Apply For Grants? Protection of Parks Protection of Protection of Water Resources Natural Heritage $$$ Money Available Protection of Farmland
  17. 17. How Do We “Protect” Land? Conservation Easements  Restricts use of property in perpetuity; protects wildlife habitat, farmland, forest land, park lands, and natural areas  Separation of most development rights from land  Usually donated; landowner gets tax deduction
  18. 18. Determining the value of Conservation Easements  100 acres of land worth $2,000/acre unrestricted 100 X $2,000 = $200,000  Easement placed on it limiting future development to no more than two new houses (one house per 50 acres)  Fair market value with the easement restrictions now $1,200/acre 100 acres X $1,200 = $120,000  Value of Conservation Easement = $80,000
  19. 19. Tax Benefits of Conservation  Value is deductible for Federal Income Tax purposes, used against 30% of income, can be spread over six years  NC Income 25% Tax Credit up to $250,000 for individuals, $500,000.00 for corporations, can be spread over six years  May reduce property taxes & estate taxes
  20. 20. EXAMPLE OF INCOME TAX SAVINGS Sarah & George earn $100,000 together. •They’ll pay +/- $39,000 to IRS •They’ll pay +/- $7,000 to NC DOR SARAH AND GEORGE DECIDE TO DONATE A CONSERVATION EASEMENT TO THE LANDTRUST VALUED AT $200,000 5. Can reduce reportable income to $70,000 for 6 years to IRS. • Would pay +/- $24,000 in taxes for 6 years ($90,000 savings) 6. Will get a $50,000 tax credit, therefore would pay NO state tax for 6 years ($42,000 cash savings),
  21. 21. Federal Inheritance Tax  Spouse pays no tax  For 2004 no tax if estate is less than $1.5million, $2 million in 2006  39-50% current tax rate
  22. 22. Section 2031( c ) Federal Tax Code  Additional Federal tax exclusion for property under easement, 40% of value of the land, excluding buildings, up to $500,000 in 2004, Property under easement must have been owned by family for at least 3 years
  23. 23. Example  Davie Johnson owns 300 acre farm on Highway 73 near Concord worth $4.5 million ($15,000/acre). Davie is a widower. – If Davie dies TODAY $3,000,000 subject to Estate Tax and kids would pay approximately $1,300,000 in taxes. (kids have to sell all or part of the family farm ) - If Daniel dies in 2007 and farm is worth $6,000,000, then $4,000,000 would be subject to Estate Tax and kids would pay more than $1,500,000 in taxes. (Assuming no additional changes in Tax Code) (kids have to sell all or part of the family farm ) Can You Do Better Than That??
  24. 24. YOU BET!!!  Let’s say Davie called The LandTrust and put a conservation easement on his $4.5 million dollar farm in 2004. - Appraiser deems farm to be “devalued” to $2.5 million dollars. Daniel dies 3 years later and farm appraises at $2.8 million dollars as restricted. Because of 40% permitted reduction, farm deemed to be $1.44 million and kids pay NOTHING!!!

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