What is Fee Land Ownership?
Sometimes we conserve land by owning it outright – what is called “fee ownership.” Landowners may donate the property or, in special cases, sell the title and all rights and interest to us. We then retain the land for conservation purposes and are responsible for managing it. The reasons that make fee ownership more appealing to us include:
- Property contains very sensitive natural resources, such as critical plant or animal habitat.
- Public use on the property is a significant conservation objective.
- The property requires intensive management, e.g., prairie restoration.
- The property is adjacent to already protected land.
When landowners donate property to the Land Trust, they are giving the Land Trust the property’s title and all of its rights and interest. Like conservation easement donations, land donations can qualify as tax-deductible income tax donations if they benefit the public by permanently protecting important public conservation values and meet other federal tax code requirements.
The Land Trust sometimes purchases land with outstanding conservation values. The Land Trust may decide to seek grant funding and/or private donations to buy such a property when a landowner is not in a position to donate it. The Land Trust also can work to find creative financing solutions when critical conservation properties fall under immediate threat from development.
Sometime a landowner sells his or her land to the Land Trust for less than its fair market value. Besides making the purchase more affordable for the Land Trust, the landowner can claim the difference between the sale price and the fair market value as a charitable income tax donation. A partial donation, what is also called a “bargain sale,” also may reduce any capital gains tax for the landowner. As with other purchases, the Land Trust may decide to seek grant funding and private donations for the purchase of a partial donation.
Landowners who want to give their land to the Land Trust for permanent protection but wish to continue living on the property may consider a life estate. With a life estate, landowners retain their right to live on the property while donating the property’s remainder interest to the Land Trust. With such a donation, landowners must uphold the property’s conservation values and continue to be responsible for its maintenance, taxes, and insurance. Upon their death or a specified date, the Land Trust assumes complete ownership. Landowners can qualify for a tax deduction based on the value of the remainder interest that is donated to the Land Trust.
The Land Trust welcomes the donation of property that is not suited for conservation. We can sell this type of property, known as “trade lands,” and use the proceeds to continue our mission of protecting important island properties. In some cases, when a donated property has some value for conservation but the Land Trust is not the appropriate fee owner, the Land Trust may sell the property with a reserved conservation easement to ensure those values are permanently protected.
Do I need to make a stewardship contribution?
It depends. When we agree to acquire a fee property, we take on significant stewardship responsibilities which are also liabilities. We maintain a stewardship reserve and legal defense fund to make sure we’ll be able to carry out these responsibilities long into the future. We request but do not require fee property donors to contribute to this fund. Landowners who are paid for a fee property are required to pay a professional service fee that comes out of their proceeds at closing. No contribution is required on trade land donations.