Glossary of Conservation Terms
Peconic Land Trust recognizes that the jargon of conservation and estate planning can sometimes be confusing, so we've compiled a list of definitions to help you brush up on your vocabulary.
Land Donation: An outright donation of land to the Trust or a municipality (hereinafter referred to as a “qualified organization”) may provide the donor with a charitable income tax deduction and a reduction in the value of one’s taxable estate.
Conservation Easement: A donation of a conservation easement (defined as a voluntary agreement between a landowner and a qualified organization that protects land, or a portion thereof, from residential or commercial development in perpetuity) may provide the donor with a charitable income tax deduction, a reduction in value of one’s taxable estate, a reduction of property taxes on the protected property, and a special property tax credit (see New York State Conservation Tax Credit). The landowner continues to own the property less its development rights, but retains the right to sell the restricted land or pass it onto heirs.
Sale of Development Rights: A sale of development rights (generally in the form of a conservation easement) to a qualified organization that protects land, or a portion thereof, from development in perpetuity. The landowner continues to own the property and retains the right to sell the restricted land or pass it onto heirs. The sale provides cash to the landowner and may result in a reduction of property taxes on the protected property. The proceeds of the sale, however, may be subject to capital gains taxes and remain as part of the landowner’s taxable estate.
Transfer of Development Rights (TDR): Development rights are transferred from one property in a sending district to another property(ies) in a receiving district(s).
Bargain Sale: A sale of property or development rights to a charitable conservation organization or municipality at less than fair market value. The difference between the fair market value and the bargain sale price is a charitable donation that may reduce the donor's income or capital gains taxes.
Basis: The original cost of the property.Conservation Subdivision: The subdivision of land on a reduced-density basis that results in the protection of land of conservation value (i.e. agricultural, natural, or historical resources). When the amount of land protected exceeds that required under zoning regulations, the landowner may be able to sell or donate a conservation easement to a qualified organization and benefit from an expedited approval process. Given the reduced density, infrastructure costs of development may be reduced.
Charitable Remainder Trust (CRT): A donor makes a gift to a charitable organization through a CRT. The donor receives a charitable gift tax deduction and does not have to pay capital gains tax on the asset. The CRT manages the investment of the asset and distributes a stream of income to the donor over a specified time period.
Reserved Life Estate: A gift of a residence with a reserved life estate to a charitable organization allows the donor to continue living while alive. On the donor's demise, the organization may sell the real estate and use the proceeds to carry out its charitable mission.
Family Limited Partnership: A form of ownership that can be used to transfer land and other assets from one generation to another. It reduces the total value of the asset, thereby reducing estate taxes.
Like-kind Exchange: A tax-free transaction where property is exchanged for other qualified, like-kind property. An exchange can be accomplished using the proceeds from a sale of land or development rights as long as the exchange property is identified within 45 days of the initial sale and the proceeds thereof are reinvested in qualified business or investment property within 180 days of such sale. The capital gains tax on the initial sale is deferred.
Tax-exempt Installment Sale: Because the proceeds of the sale are spread over a number of years, the seller defers payment of the capital gains tax and, by increasing the basis, reduces inheritance taxes that are paid during the term of the installment sale.
Agricultural District: Participation in the New York State Agricultural District Program may reduce real property taxes an average of 80% on land in agricultural production and provide legal protection from nuisance complaints. The landowner agrees to keep the land in agricultural production for an 8-year term.