While there are many ways to conserve land, only the most common are summarized below. Permanent land transactions with the Richmond Land Trust, a 501(c)(3) public charity, qualify for the tax benefits outlined here.
Permanent Options
Donation
Donation of land to a land trust is the most straightforward method of land conservation. It relieves the owner of management responsibilities and real estate taxes while it maximizes income tax and estate tax benefits.
Bargain Sale
A bargain sale is a real estate transaction where the seller is willing to sell to a land trust at substantially less than the fair market value in exchange for keeping the land undeveloped. This allows a land trust to preserve land that it might not otherwise be able to afford, and it provides the seller a tax-deductible charitable donation for the difference between the fair market value and the selling price.
Conservation Restriction
A conservation restriction (CR) is a permanent and popular method of protecting land from development which allows the donor to retain ownership of the property. Granting of a CR legally restricts the current owner and future owners to the terms of the CR, which usually prohibit development of the land, but does allow activities that do not damage or reduce the conservation values of the land, such as agricultural, forestry, and passive recreational activities. CRs are generally negotiated with land trusts and obligate the land trust to monitor and enforce the terms of the CR in perpetuity. Although CRs are donated for the benefit of the general public, they do not allow public access unless specifically granted in the CR. Not all requests for a CR have been accepted by the Richmond Land Trust because some land is self-protecting and other parcels have insufficient public benefit to justify a CR and its associated tax reductions. In Massachusetts, CRs must be approved by both the town and the state. In many other states, CRs are referred to as conservation easements.
Temporary Options
Chapter 61
As development pressures caused land values to increase, the state recognized the need to reduce local taxes on forestry, farm, and recreational land to prevent these lands from being sold for development because of higher real estate taxes. In response to this threat to large tracts of open space, the state passed what is commonly referred to as Chapter 61. Actually, it consists of three statues: Chapter 61 - Forest Land Act; Chapter 61A - Agricultural and Horticultural Land Act; and Chapter 61B - Recreational Land Act. These are voluntary and temporary forms of land conservation, each with its own requirements, tax reductions, and penalties for early withdrawal from the program. The tax-reduction factors are set by the state annually and result in reductions from 50 percent to 99 percent, depending on the use and market value of the land. The statutes also provide the town a right of first refusal (which the town may assign to an organization such as the Richmond Land Trust) if the land is being removed from Chapter 61 or is being sold for non-conservation purposes. Approximately 4,500 acres, or 37 percent, of Richmond's 12,205 acres are enrolled in one of the Chapter 61 categories.
Deed Restriction
A deed restriction is a legal device that allows the current owner to impose restrictions on the future use of land for a period of thirty years unless otherwise stated in the deed. Massachusetts law establishes an opportunity to renew the restriction in twenty-year increments.
More information about Land Conservation Options is available at this link to a page on the Berkshire Natural Resources Council website.
More information about Taxes and Land Conservation is available at this link to a page on the Massachusetts Land Trust Coalition website.